Valentine’s Day is widely believed to be the most romantic day of the year, yet for Amazon and New York City, this past February 14 marked a nasty split between the two would-be partners.
You know the story: After a lengthy search that had various cities and states wooing the e-Commerce giant, Amazon selected New York City as its site to build an additional corporate headquarters. The company selected a site in Queens, in what promised to bring additional tax revenue and some 25,000 new jobs to the area. It was originally hailed as a win by New York Governor Andrew Cuomo, as it has been one of his goals since taking office to diversify New York City’s economy. The addition of an Amazon campus, beyond the initial benefits we mentioned above, looked to be a bridge to bringing more tech companies into the fold.
But many lawmakers took issue with Amazon coming to the Big Apple, specifically because the company was being given some $3 billion in incentives to do so. In fact, Amazon didn’t just work New York City into bending over backwards to accommodate it, it acted like it was a prized free agent and had to be wined and dined by various municipalities to see where it could get the best offer.
It all came to a head on Valentine’s Day, with Amazon officially announcing it wouldn’t be moving forward with its planned New York City location due to criticism from various state and local officials.
However, news broke last week that the NYC-Amazon breakup may only be temporarily. They may just be “taking a break,” you could say. Governor Cuomo has reportedly been in contact with Amazon officials, and supporters of the relationship have penned an open letter to Amazon CEO Jeff Bezos urging him to reconsider the deal. In light of Amazon and NYC’s on-again, off-again relationship, we thought it would be fitting to take a closer look at what each side has to gain — and lose — from a reunion.
What’s in it for NYC?
If New Yorkers can stomach giving billions of dollars in incentives to a lucrative e-Commerce company run by one of the richest men on Earth, the benefits appear significant. About 25,000 jobs will be added to the area, and the company will invest some $2.5 billion in the city. Amazon’s presence could inspire other West coast-based companies to follow suit with an eastern HQ.
Despite a larger tax base, the downfall for NYC will likely be in terms of congestion and rising housing prices in the area around the headquarters.
What’s in it for Amazon?
Besides some massive government incentives, a lot. When the company announced it was searching for an additional headquarters, it was because it needed additional space. Its current headquarters in Seattle takes up nearly 20 percent of the city’s prime office space. Aside from not being able to expand any more in the area, it has already amassed the city’s top technical talent. Therefore, a new HQ would serve two purposes: more space for a rapidly growing company, and attracting non-West coast tech talent.
Why would Amazon leave? We can’t say we blame them if it’s going to be more of a headache to move forward on things, especially when you note that it plans to build an additional headquarters in Virginia. Amazon has already faced some backlash in Seattle, where many locals blame the company for driving up housing prices, and for other things such as income inequality, gentrification and traffic congestion. Why would it want to plant roots in another community where it’s likely to face the same type of blow back?
So, will Amazon stay or will it go? Even critics of Amazon’s original plans for a new HQ in NYC have admitted that they’d be open to a return under the right circumstances, which roughly translates to some sort of amended incentive package.
Regards,
Ethan Warrick
Editor
Wealth Authority
