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Amazon HQ2 Lands on New York City and Washington, D.C.: Will the Result Be a Boom or a Bust?
Amazon’s highly anticipated announcement in mid-November that New York City and Northern Virginia will be the locations for its “split” second headquarters ended a lengthy contest among major American cities vying to be selected. Amazon estimates that it will invest over $5 billion in construction in the two cities combined and that they will eventually employ up to 50,000 high-paying jobs. Amazon also expects that in addition to this direct hiring and investment, the construction and ongoing operations of HQ2 will create tens of thousands of additional jobs and tens of billions of additional investment in the surrounding communities.
The selection will undoubtedly result in an economic boom for each location, with the impacts being felt over every facet of the local economy, including jobs, infrastructure, transportation, education and housing. Critics, however, were quick to point out that the selection will also result in several undesirable consequences of landing the coveted prize, including an exacerbation of the lack of affordable housing and additional strain on each region’s already overloaded transportation infrastructure.
In the official announcement, Amazon referred to the area selected for the Northern Virginia location as “National Landing,” a re-branding of portions of Crystal City, Pentagon City and Potomac Yards, with easy access to Reagan National Airport. This region has undergone significant development in the last fifteen years and can expect substantial additional interest from the real estate development community as developers vie to position themselves to reap the benefits from the project.
The infusion of 25,000 high-paying technology jobs into National Landing, not to mention new retail and food service jobs to cater to these new workers, is certain to reinvigorate and revitalize the surrounding retail and restaurant scenes. On top of that, with many of the new employees expected to be newly minted college graduates or young professionals who often prefer to live close to where they work, the project will create even more demand for housing in and around the National Landing area.
To outsiders, the impact on the New York City location, Long Island City in Queens, might appear to be similar to the impact in Northern Virginia, but the initial reaction from residents and local community leaders was one of outrage and despair. While half of HQ2 will bring more jobs and construction to Long Island City, many residents have complained of the potential for overcrowded schools, bottle-necked subways, rising rents, and failing infrastructure.
Given the tax incentives furnished to Amazon by both Virginia and New York, totaling about $2.8 billion, the citizens of both locales are hoping for the best outcome. Stay tuned to see whether the effects are more positive or negative.
Acquisition, financing, restructuring, leasing and sale of real estate assets on behalf of commercial and nonprofit clients is the focus of James Shipe's practice, with experience in single asset and large portfolio transactions. Jim is an Associate in the Real Estate group in the firm's Washington, DC office.
Prior to joining Goulston & Storrs, Jim was an Associate at an Am Law 200 firm in that firm's Washington, DC office.
Jim worked as a structural engineer at URS Corporation prior to beginning his legal career. During his time there, he worked on government projects, including the Standard Embassy Design for the US Department of State, the renovation of the National Archives, and the design of a large aircraft hangar and maintenance facility for the Tennessee Air National Guard.