The Crystal City area in Arlington, Virginia, where Amazon prepares to construct its next huge head office.
Matt McClain/Washington Post by means of Getty Images
It was organization as normal in Long Island City late last month. Catering and moving trucks buzzed in and out of a waterside area. One employee manned a forklift on the pathway while another close-by spray-painted a metal frame.
You would not understand it from standing there, however simply weeks previously this peaceful commercial block in Queens was slated to end up being a 25,000-employee school for Amazon — that is, up until protesters and regional political leaders assisted eliminate the job.
Meanwhile, at Crystal City, in Virginia’s Arlington County, it’s an extremely various scene, where demolition has actually currently begun in preparation for building and construction of Amazon’s making it through 25,000-employee advancement. Local activists are raising issues about the Virginia job, however — unlike in New York — there appears to be far less vitriol.
When the New York job broke down in February, focus rapidly moved to Crystal City, where lots of observers questioned if both advancements might stop working. But according to advancement professionals, regional political leaders and market information, the Virginia job was constantly a much better fit and more vital to Amazon’s future than the New York website. Not just that, however ignoring both jobs would be an even larger shame for the business. For those factors, it promises Amazon will persevere in Crystal City, even if more demonstrations or difficulties bubble up.
“With Amazon pulling out of New York, the potential gains for Virginia have only gone up,” stated Adam Ozimek, a Moody’s Analytics senior economic expert. “It seems unlikely that the deal will be stopped at this point.”
The future of HQ2
Amazon’s enormous growth job, called HQ2, was initially presented in September 2017 and delighted in months of excitement as numerous towns competed for the advancement in hopes of rejuvenating their neighborhoods and bringing high-paying tech tasks. But after the winners — Long Island City and Crystal City — were revealed in November, the general public action in New York rapidly turned unfavorable amidst issues about stretched facilities, displacement and business well-being.
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Amid a broader backlash against the tech industry and its business practices, HQ2 has turned into an albatross for Amazon. The company now needs to work through its last standing HQ2 development with far less cheering from the public and while working to repair its reputation, which took a beating in New York. If it manages to do both, HQ2 may become a long-term success, despite a botched and stumbling start.
Amazon didn’t respond to a request for comment for this story.
What makes the Virginia project different
When Amazon first unveiled its plans for HQ2, the project was presented as a single 50,000-employee site that would be equal to its existing headquarters in Seattle. But the company ultimately announced two 25,000-employee projects instead, saying the split would make it easier to hire top tech talent, and quickly. A 5,000-employee site was announced for Nashville, too.
Arlington County, just outside Washington, DC, was a predictable pick and affords Amazon a handful of obvious advantages.
The DC area is the biggest data center market in the US and already a major hub for Amazon Web Services, one of the company’s leading profit generators. Building a new headquarters in DC brings Amazon closer to the US’ political power center and puts it in a better position to gain more government contracts for cloud computing, government supplies purchasing and other services. For these reasons and more, the DC area was seen as the long-time frontrunner for the project.
New York was a bit more of a surprise choice, but fit with Amazon’s efforts to grow in fashion, marketing and advertising markets.
Both deals included plans to expand to roughly 40,000 employees, nearly as large as the Seattle headquarters, with 45,000 employees. Considering that potential expansion, the company ultimately may have realized it didn’t need such a rapid expansion in headcount that would come from two HQ2 projects, according to a person familiar with Amazon’s thinking.
A look at Amazon’s planned HQ2 site in Queens, New York, which is inhabited by squat industrial buildings set along the East River.
Ben Fox Rubin/CNET
One element that makes the New York and Virginia projects so different is their current uses. While the site in Long Island City is already filled with several operating industrial buildings, the Crystal City project includes loads of empty office space.
“This is a game-changer for Arlington,” said Stephen Fuller, a professor at George Mason University’s Schar School of Policy and Government. “The tax base is eroding; this turns that around.”
The Virginia location was first developed in the 1960s on old railroad facilities, junkyards and industrial space. Many of its first occupants were military workers, said Fuller, who was hired by the Virginia Economic Development Partnership last August to study the economic impact of HQ2.
Then the 9/11 terrorist attacks pushed many of those military tenants out of urbanized areas. Tightening federal budgets and a deep recession in 2008 added to Crystal City’s woes, with 24,000 jobs eventually pouring out of the neighborhood, leaving a huge hole in the local economy, Fuller said.
The potential to bring back all those lost jobs with one major tenant was why local officials pushed to get the project.
“It fits,” said Christian Dorsey, chairman of the Arlington County Board. “And with it comes a substantial amount of money from the Commonwealth of Virginia” for infrastructural improvements that were long needed.
Long Island City isn’t facing the same problems. There are several office developments being constructed there already and office vacancy rates are slightly better, at 17% versus 20% in Crystal City, according to real estate company Cushman & Wakefield and Arlington County. Added to that, the population density in New York is nearly three times higher than in DC, which is likely why many New Yorkers complained about HQ2 burdening already strained infrastructure, including public transit, schools and sanitation.
Political support in Virginia is far stronger, too, with local and state officials standing together to back the project. In New York, several state and local Democrats worked against fellow Democratic Gov. Andrew Cuomo and Mayor Bill de Blasio as they tried to move the development forward.
Cuomo and many local corporate leaders have since attempted to revive the New York development, but Amazon hasn’t showed any sign it plans to come back.
“We look forward to continuing our partnership with Amazon on the project that we agreed to here in Virginia and that has been approved overwhelmingly by our General Assembly,” Alena Yarmosky, spokeswoman for Virginia Gov. Ralph Northam’s office, said in a statement.
Not all smooth sailing
While Virginia appears a better location for Amazon, there are still plenty of problems local activists want to address with the project.
Roshan Abraham is part of For Us, Not Amazon, a coalition of community activists that formed to raise concerns about the development. As in New York, activists have opposed plans to provide Amazon with financial incentives, saying Amazon is one of the most valuable companies in the world and doesn’t need the money.
Virginia offered $573 million in incentives, still well below New York’s offer of $3 billion.
For Us, Not Amazon has also raised concerns about the project potentially displacing residents in nearby Arlandria, a lower-income, largely Latino neighborhood. The coalition called for a public hearing with Amazon to address their discomfort with the company’s business practices, such as its treatment of workers, anti-union stance and marketing of its services to US Immigration and Customs Enforcement.
“We’re constantly reminding the board that we’re your constituents, not Amazon,” Abraham said.
Dorsey, from the Arlington County Board, has resisted scheduling a public hearing, saying he’d be open to a forum on the incentives package with Amazon, not the many broader issues activists have raised. He added that he doesn’t want a repeat of New York City Council’s hearings, in which Amazon executives were lambasted for hours by council members on a wide variety of topics and audience members started chants against the company.
He said he didn’t see Amazon’s business practices deviating significantly from those of other companies in the DC area, which include defense contractors. For that reason, he added, there was little basis on which to argue that Amazon didn’t represent Arlington’s values, as activists have stated.
“I would love to create an ecosystem of companies and people that share my value set,” Dorsey said. “Communities fall very short of that, with or without Amazon, including ours.”
Originally published April 5.
Update, April 8: Adds commentary from Moody’s Analytics.
