In Addition to HQ2 Tax Breaks, Amazon Sought $1B for Other Real Estate Projects

January 17, 2020

While Amazon hunted for its second headquarters in 2017, senior executives at the company also wanted to secure an extra $1 billion for other real estate projects, The Wall Street Journal reports. That was a separate goal from the economic incentives Amazon was seeking for its HQ2 project, according to the report. The online retail giant has sparked a debate over whether incentives are a smart way for cities and states to attract jobs and development.

Amazon ultimately decided to put its second headquarters in Virginia, which offered $1 billion in incentives, including infrastructure improvements. Amazon abandoned plans to split its second headquarters between Virginia and New York after a public uproar in New York over $3 billion in incentives that the state was offering for the company to relocate there. “Like many other companies, we are eligible to access incentive programs created and regulated by cities and states to attract new investors, as they know that these investments pay a long-term dividend in the form of jobs, new economic opportunity, and incremental tax revenue,” Amazon told the Journal. “The vast majority of these incentives are statutory and post-performance; Amazon is eligible only after having created and maintained a certain number of jobs within the community.”

Amazon reportedly has been trying to focus less on tax breaks and more on transportation and workforce-related incentives. Real estate is also becoming a big source of its growth. “Amazon’s real estate footprint has grown sharply to accommodate campuses for its 750,000 global employees, a network of fulfillment centers, data centers for its cloud-computing arm, and physical stores,” the article notes. “Amazon leased or owned 288 million square feet of property globally, according to its 2018 annual report.”

State and local governments often use incentives to attract new companies. They spend at least $30 billion a year to attract and keep companies. Yet, the deals don’t always translate into economic benefits and wider job growth, a new study reported by the Journal suggests. 

Still, Amazon is unique, researchers say. “The Amazon phenomenon is not very common,” says Didi Caldwell, president of Global Location Strategies, a site-selection firm. “You don’t see companies building that much bricks and mortar on an annual basis.”

Source: 
Amazon Sought $1 Billion in Incentives on Top of Lures for HQ2,” The Wall Street Journal (Jan. 16, 2020) [Log-in required.]