In Shocking Reversal, Amazon Pulls Out of New York City

The world’s largest online retailer, citing political opposition, says it will not reopen search for another HQ2
 
 
  • The world’s largest online retailer, citing political opposition, says it will not reopen search for another HQ2

Amazon Inc. didn’t feel the love from New York City.

In a stunning move, the world’s largest online retailer said Feb. 14 that it would abandon plans to build a headquarters in Long Island City, Queens. The Seattle company cited mounting political opposition as its reason for pulling out. It said it would not reopen its search, meaning the company's much-heralded HQ2 will be located only in Arlington, Virginia, on the outskirts of Washington, D.C.

“While polls show that 70 percent of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City,” the company said in a statement on its blog. “We are disappointed to have reached this conclusion.”

It's a huge comedown for the company after an unusual, highly visible 14-month search for a new headquarters. Most companies maintain a high level of secrecy in their site-selection strategies, but Amazon chose to launch a competitive beauty pageant as a way of extracting incentives from municipalities across North America. That strategy gave the company deep information on the 238 cities that originally vied for HQ2, but it also generated intense criticism over the drawn-out process and the role of corporate incentives. Amazon whittled the list to 20 finalist cities before choosing New York and Arlington.

Amazon had said the size of HQ2 would be equal that of its Seattle campus. A report by BuildZoom estimated that Amazon occupies almost 14 million square feet in the Puget Sound region.

Brian McGowan, CEO of the region’s new economic development agency Greater Seattle Partners, was previously CEO of Atlanta BeltLine, an economic development organization involved in Atlanta’s failed bid to land HQ2. He recently told Seattle Business magazine that he was surprised at the huge incentives package New York officials gave to the company. Amazon would have received direct incentives of $1.525 billion for creating 25,000 jobs in Long Island City, plus a cash grant of $325 million based on the square footage of buildings it occupied. That dwarfed the $573 million in incentives Arlington officials doled out.

“I think it is a dangerous game for cities to play at that level,” McGowan said. “The fact that they move from one place to another, they might move again someday. The idea that you put up a bunch of taxpayer dollars in perpetuity is no guarantee (that municipalities) will ever get the full return on that investment.”

Amazon said it now employs more than 5,000 workers in New York City and would continue growing there organically.

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