Amazon Close to Agreements for HQ2 in New York, Northern Virginia

(Bloomberg) -- Amazon.com Inc.'s yearlong search for a second headquarters is nearing an end, people with knowledge of the matter said.

The e-commerce giant is close to agreements that would split the new headquarters between two locales, said one of the people, who asked not to be identified discussing non-public matters. One will be the Crystal City area of Arlington, in Northern Virginia, two people said. Another will be Long Island City, in the New York borough of Queens, other people said. An Amazon spokesman declined to comment.

Amazon last year announced plans to invest $5 billion in a second HQ and hire as many as 50,000 people, setting off a frenzy of interest from cities in the U.S. and Canada. It has announced 20 finalists and is scheduled to make a final decision by the end of the year.

The New York Times earlier reported that Amazon was near a deal to pick Long Island City, and the Wall Street Journal earlier reported that Amazon will choose two locations after deciding that one location lacked sufficient technology talent. The Washington Post had previously reported that Amazon was in advanced talks to locate its second headquarters in Crystal City, which is across the Potomac River from Washington.

Amazon has fueled an economic boom in its hometown of Seattle, where it is also often blamed for traffic problems and skyrocketing housing costs that squeeze some residents out of the city. By choosing more than a single location, it may be seeking to avoid criticism that its arrival will burden local infrastructure.

"You could look to Seattle and see that it's had great positive consequences, but it also probably has had some unintended ones that maybe aren't as well received," SunTrust Robinson Humphrey Inc. real-estate analyst Michael Lewis said. "You can see what it's done to the cost of living in Seattle."

Crystal City's convenience is part of the attraction. It's just across the Potomac River from Capitol Hill in Washington, and a quick jaunt from Ronald Reagan Washington National Airport and the Pentagon. Amazon Chief Executive Officer Jeff Bezos bought a home in Washington in late 2016 and owns the Washington Post; the e-commerce giant has also been lobbying a lot more lately.

The Crystal City neighborhood has a concentration of high-rise offices, hotels and residential buildings. An exodus of government tenants left the area with relatively cheap, aging office space that could be used by Amazon while it renovates existing properties or builds anew.

New York Governor Andrew Cuomo met with top Amazon executives two weeks ago to discuss the company moving to Long Island City, a person with knowledge of the matter said. That would place the operations in an area of Queens directly across the East River from Manhattan. New York City Mayor Bill de Blasio also met with Amazon executives around the same time, a city official said. The mayor's office has been leading tours of the area since April and convened officials from several New York City universities to outline ways to meet Amazon's needs, this person said.

Long Island City, New York City's fastest-growing neighborhood, will get a $180 million infusion of capital to build and improve schools, streets and parks, de Blasio said last week. The plan is part of an investment strategy under development for three years, a period in which the Queens neighborhood has led a citywide building boom. Apartment towers have sprung up in Long Island City, with 1,436 new housing units approved in the 12 months ending July 1.

Long Island City is served by 8 subway lines, 13 bus lines, the East River Ferry, the Long Island Railroad, two bridges and a tunnel linking it with Manhattan. It's also got quick access to LaGuardia and John F. Kennedy International airports.

Amazon has more employees in the two selected areas than anywhere else outside of Seattle, home of its main headquarters, and the San Francisco Bay Area, according to the New York Times.

Some of the final contenders are situated close to each other and draw from the same labor pools. New York City and Newark, New Jersey, were among the finalists, as were Washington, Northern Virginia and Montgomery County, Maryland. Amazon could have chosen a single metropolitan region but still had to negotiate with multiple states and local governments for tax incentives. Dallas is still a contender, the Wall Street Journal reported earlier this week.

In his meeting with Amazon executives, Governor Cuomo said he's prepared to offer the company hundreds of millions of dollars in incentives, the person said. “I am doing everything I can,” Governor Cuomo told reporters when asked Monday about the state's efforts to lure the company. “We have a great incentive package,” he said.

“I'll change my name to Amazon Cuomo if that's what it takes,” Governor Cuomo said. “Because it would be a great economic boost.”

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To contact the reporters on this story: Spencer Soper in Seattle at ssoper@bloomberg.net;Lily Katz in New York at lkatz31@bloomberg.net;Henry Goldman in New York at hgoldman@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Tom Giles

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