AMZN Amazon.com Inc

By Laura Stevens, Keiko Morris and Katie Honan 

Amazon.com Inc. announced Tuesday New York City and a Northern Virginia suburb of Washington, D.C., would be homes for the company's second and third headquarters, ending a more than yearlong public contest that began with 238 candidates and ended with a split of its so-called HQ2.

Amazon said it will invest $5 billion across the two new offices that will each have more than 25,000 employees in New York City's Long Island City and in Arlington, Va., at the National Landing area, which encompasses Crystal City and is located in the Washington, D.C., metro area.

The company also said it would create a new operations center in Nashville with more than 5,000 jobs.

Amazon split HQ2 in half between New York and Northern Virginia in part because it wanted to recruit enough of the best tech talent. The decision effectively gives Seattle-based Amazon a major presence in three coastal hubs that politically lean left, at a time when tech companies are under scrutiny for their perceived elitism and liberal social views.

Government officials in both New York and Northern Virginia were expecting to hold events for announcements later Tuesday.

New York City Mayor Bill de Blasio discussed the Amazon deal Monday night during his weekly television appearance, although he didn't confirm that the city had been officially selected. He was hopeful that HQ2 would come to New York City. "We're talking about the single biggest economic development deal in the history of New York City," he said.

Amazon's move to New York pits it against rival Google, which is gearing up for its own expansion in the city. The Wall Street Journal reported last week that the Alphabet Inc. unit will add office space for more than 12,000 new workers, an amount nearly double the search giant's current staffing in the city, people familiar with the matter said. On Monday night at the Journal's D.Live tech conference, Google financial chief Ruth Porat confirmed the company plans to double its New York City staff of 7,000 over a decade.

The District of Columbia area, which had three locations among the finalists including Crystal City, was considered a leading candidate in part because Amazon Chief Executive Jeff Bezos has a second home there and owns the Washington Post.

Crystal City, a 1960s-era office and residential development close to the Pentagon, has seen its fortunes wane over the past decade or so, as major employers, including Defense Department and private-sector tenants, have pulled up stakes.

The neighborhood's sheer size and proximity to Washington, Ronald Reagan Washington National Airport, Metro stops and other transportation made it an attractive prospect for Amazon's ambitious second-headquarters plan, according to people who have been involved in the discussions. Adding to its appeal, it is also largely in the hands of a single developer.

A potential downside is the region's notoriously bad traffic, which would likely require significant new investments, according to people familiar with the matter. Amazon's impact on housing could be substantial.

Virginia could be a good fit for Amazon politically, as an important purple swing state that promises political clout no matter which party is in power. While the D.C. area lacks New York's cutting-edge culture, it is big, highly diverse and just maybe hip enough.

Long Island City, in Queens, was a longtime industrial neighborhood that is experiencing a residential housing boom, with more than 16,000 new apartments built since 2006. It is the fastest-growing community in New York City.

The neighborhood is along the East River and is accessible by multiple subway lines, the Long Island Rail Road and two ferry stops. It is also close to La Guardia and John F. Kennedy International airports.

While the city included four neighborhoods in its original bid, officials were leaning on Long Island City from the start, according to people familiar with the process.

Amazon began the search across North America in September 2017, with the aim of creating a second, equal headquarters to its home base in Seattle. It had said the new location would house roughly 50,000 jobs and represent billions in investments.

Amazon narrowed the contest to 20 finalist cities in January, then asked for reams of data and made whirlwind two-day site visits, during which cities tried to impress the company's economic development team.

Then came the big surprise a week ago when the Journal reported that Amazon planned to split its second headquarters evenly between two locations rather than picking one city. The change in plans came after Amazon executives concluded it could recruit more of the best tech talent if it spread the office over two locations. And by halving the size, Amazon would help ease potential issues with housing, transit and other areas where adding tens of thousands of workers could cause problems.

The decision to split what was deemed one of the largest economic development projects in recent history triggered a flurry of criticism about Amazon's original intentions but also fresh hopes. Some city officials said they would have tailored their proposals to match that need, while others said they thought it increased their city's chances.

The split also raised questions about how equal the two new locations will be with Amazon's current Seattle base, which employs more than 45,000 people.

Amazon factored in a host of considerations, including whether it would be one of the largest companies in a city, something that might make it a magnet for the kind of scrutiny it receives in Seattle over social problems. Plus, Amazon hoped through its investments to show an actual economic impact in a new area, highlighting its job creation abilities.

Some economic development experts scratched their heads at Amazon's decision to make the process public, which resulted in complicating factors including a longer-than-usual short list and speculative real-estate purchases around proposed sites.

It also has brought additional scrutiny to potential incentives Amazon might receive to locate in certain areas.

Still, the process has resulted in a year of positive publicity, highlighting Amazon's ability to create jobs and investments, even as the company has faced critics ranging from President Trump to Vermont Sen. Bernie Sanders, who have called out the company over issues like wages.

"This was really a platform for Amazon to market its transition from traditional e-commerce" into a major tech company creating jobs across industries, said John Boyd, principal at site-selection consultancy the Boyd Co. "It was also a platform for cities to promote themselves to a global audience."

The choice of its new office sites follows Amazon's September announcement that it would raise its minimum wage for warehouse workers to $15 an hour. Amazon also has announced major hiring plans over the past year as it builds out more warehouses and expands its U.S. workforce.

Amazon's decision leaves a group of cities that expended months of resources and time without a clear reward. Some cities have said the process raised awareness for other potential economic-development deals.

--John McKinnon and Jimmy Vielkind contributed to this article

Write to Laura Stevens at laura.stevens@wsj.com and Keiko Morris at Keiko.Morris@wsj.com

(END) Dow Jones Newswires

November 13, 2018 12:18 ET (17:18 GMT)

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