Was Boston just not big enough for Amazon?
After 14 months, dozens of site visits, and seemingly endless analysis from all quarters, Amazon on Tuesday confirmed that it will split its second headquarters between two places that many had predicted would make the most sense all along: the Washington, D.C., region, and New York City.
The e-commerce giant plans to build one campus for up to 25,000 employees in Long Island City, Queens, and another in the Crystal City neighborhood of Arlington, Va. — newly rechristened “National Landing’’ – just outside Washington, close to the Pentagon and Reagan National Airport. A smaller complex, with up to 5,000 workers focused on logistics, will go to Nashville.
Amazon — which initially launched a nationwide search for a single, region-transforming campus to supplement its Seattle base— said it decided to opt for two sites to gain greater access to brainpower.
“We are excited to build new headquarters in New York City and Northern Virginia,” Amazon chief executive Jeff Bezos said in a statement. “These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come.”
But where does that leave Boston?
The city in recent years has used its highly educated workforce to fuel a roaring economy and was widely considered a top contender for Amazon’s so-called HQ2. Now it will watch one of the world’s most important companies focus its growth in two rival cities to the south.
From one perspective, it’s an unfortunate turn of events for Boston and the surrounding communities hoping to land the new headquarters, said C.A. Webb, president of the Kendall Square Association and a longtime leader in Boston’s tech community. The city could have used the momentum of Amazon’s anticipated $5 billion investment to address long-festering challenges of housing and transportation.
At the same time, she said, it’s a relief. Tech companies that are growing here don’t have to worry about Amazon hiring away their workers, and home prices probably won’t soar even higher. And the finality of the decision allows city and business leaders to concentrate on what’s best for Boston.
“At the end of the day I think it’s neutral,” Webb said. “Now we can swiftly move along.”
And Boston does so knowing Amazon already has about 2,000 workers in the city and Cambridge — making the area one of its biggest tech hubs outside Seattle — with plans to hire 2,000 more to fill a new building soon to break ground in the Seaport District. That cluster would rival Amazon’s just-announced Nashville “Center of Excellence” in size. Then there’s Amazon Robotics in North Reading, newly acquired PillPack in Somerville, and Amazon’s health care partnership with Berkshire Hathaway and JPMorgan Chase, which will be headquartered here. Add in warehouse and delivery jobs, and Amazon already employs roughly 4,000 people in Massachusetts, with more coming in the Seaport and elsewhere.
City and state officials Tuesday were quick to tout that figure, and the relationship it represents, in statements about the company’s decision.
“Amazon is an important part of Boston’s economy, a large employer and a valuable partner who is actively hiring and expanding in Boston and the area,” Boston Mayor Martin J. Walsh said in a statement. “While I am proud Boston was named to Amazon’s short list for its second North American headquarters, our future will not be defined by a single company.”
Still, local officials arecurious about what that company thinks of the city as a place to do business. State and city economic development officials talked by phone Tuesday with Holly Sullivan, who led Amazon’s search team. She praised the region’s talented workforce, especially in engineering, robotics, and software development, said people familiar with the call.
It wasn’t clear if tax breaks — or the lack of — were part of the conversation.
In its initial proposal, Massachusetts did not offer any incentives to Amazon beyond relatively modest existing programs available to any company that adds jobs and invests in the state. Talks over HQ2 never advanced to the point where larger subsidies were on the table, people familiar with the discussions said, while both Walsh and Governor Charlie Baker made clear in public comments that they wouldn’t try to win a bidding war for Amazon.
New York State, meanwhile, said Tuesday that it will give Amazon $1.525 billion worth of tax breaks, should it create the promised 25,000 jobs, while Virginia offered $573 million, plus nearly $200 million more in improvements to roads and other infrastructure around Amazon’s campus there.
“That’s an awful lot of money,” said Aaron Jodka, research director at real estate firm Colliers International in Boston. “Were they going to get that kind of money here? Probably not.”
But subsidies were likely only one piece of Amazon’s equation, and a small one at that, said Tom Stringer, a site selection consultant with advisory firm BDO. Both Washington and New York have much larger pools of tech workers than Boston. Their built-in advantages as the seat of the federal government, and a global capital of finance and media, respectively, were too much for any other city to overcome, he said.
“I don’t think this choice says anything bad about Boston,” Jodka said. “Boston just didn’t have the strategic advantages, or the volume of workers, that Amazon was looking for.”
Now the people who were working on bringing HQ2 to Boston can focus their energy elsewhere.
Tom O’Brien, whose HYM Investment Group is developing Suffolk Downs — once a potential site for Amazon’s base — said he plans to keep pushing the 161-acre project through city permitting. Without the prospect of landing Amazon, the plan will include more housing — 10,000 units instead of 7,200 — and less office space than the mix when Boston pitched it for HQ2. But it’s basically the same idea O’Brien launched before Amazon unveiled its search for a second headquarters: a mixed-use neighborhood with housing, large blocks of office space, and retail.
“There will be opportunities for thousands of people to live there, and thousands of people to work there,” O’Brien said. “I thought it would have been great for Amazon. But only they really know what they want, and what they need.”