Amazon plans to split HQ2 in two locations

SEATTLE • After a year-long search for a second home, Amazon is finalising plans to have a total of 50,000 employees in two locations, according to people familiar with the matter, in a twist to a lengthy contest that has drawn overtures from locales across North America.

The firm is nearing deals to move to the Long Island City neighbourhood of Queens and the Crystal City area of Arlington, Virginia, a Washington DC suburb, sources said.

The world’s largest online retailer sparked a bidding frenzy in September last year when it announced that it would invest more than US$5 billion (S$6.9 billion) over almost two decades in an “HQ2” in addition to its home base in Seattle, and hire up to 50,000 people.

One of the major reasons for the decision was for Amazon, which has satellite operations around the world, to recruit top talent.

Offering a choice of head offices could help it win new workers in a battle with Alphabet Inc’s Google and others, with which Amazon competes in areas such as cloud computing and voice-controlled technology.

“Amazon is going where it won’t have to jostle with Google and Facebook as much as it would in San Francisco or it does in Seattle,” said Mr Alex Snyder, an analyst at CentreSquare Investment Management near Philadelphia.

Amazon executives met New York Governor Andrew Cuomo at the latter’s Manhattan office two weeks ago, said one of the people briefed on the process, adding that the state had offered potentially hundreds of millions of dollars in subsidies. Executives had separate meetings with Mayor Bill de Blasio, a person briefed on that discussion said. Long Island City is a short subway ride from Midtown Manhattan.

Besides the advantage of tapping two pools of talented labour, picking multiple sites could allow Amazon to possibly avoid being blamed for the housing and traffic woes of dominating a single area.

“I am doing everything I can,” Mr Cuomo told reporters when asked on Monday about the state’s efforts to lure the company. “We have a great incentive package.”

“I’ll change my name to Amazon Cuomo if that’s what it takes,” he said. “Because it would be a great economic boost.”

The need to hire tens of thousands of high-tech workers has been the driving force behind the search. Many experts have pointed to Crystal City as a front runner, because of its strong public transport system, educated workforce and proximity to Washington DC.

Amazon declined to comment on any final decisions. The Wall Street Journal earlier reported Amazon’s decision to pick two new locations instead of one.

If Amazon goes ahead with two new sites, it is unclear whether the company would refer to both locations as headquarters or if they would amount to large satellite offices. HQ2 would be “full equal to our current campus in Seattle”, the company had earlier said.

Besides the advantage of tapping two pools of talented labour, picking multiple sites could allow Amazon to possibly avoid being blamed for the housing and traffic woes of dominating a single area.

It could also give it greater leverage in negotiating tax incentives.

The local governments “might feel pressure to increase the incentives they are offering Amazon, and the surprise is yet another news cycle for the Amazon headquarters process”, said Mr Jed Kolko, chief economist at online job site Indeed.

As Amazon’s search dragged on, residents worried about the effect such a massive project could have on housing and traffic, as well as what potential tax incentives could cost the community. The decision to split into two sites could alleviate some of that resistance.

Seattle has been one of the fastest-growing cities in the US, in part because of Amazon’s growth. The company has about 45,000 employees in the city.

Mr Jay Brodsky, who lives in Arlington, Virginia, said his wife recently took part in a 45-minute phone poll over the likelihood of Amazon’s move. “It was everything from ‘What do you think about the local government?’ to ‘Are you concerned about traffic?’ ” he said.

“People are sort of on pins and needles,” said Mr Brodsky. “It’s almost like people want it to happen, and are afraid of what would happen if it does.”


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