True, New Yorkers are giving Amazon $1.5 billion in tax incentives to put one of its headquarters offices in the Queens community of Long Island City.
But New York City and the state together will garner a 9-to-1 rate of return on that investment, with combined tax revenue of $27.5 billion.
“That is the highest rate of return for any economic incentive program that the state has ever offered,” Gov. Andrew Cuomo said in a Tuesday afternoon new conference, noting that a popular tax credit for filmmakers generates just $1.15 for every dollar invested.
“This is a big moneymaker for us,” he said.
Along with a minimum of 25,000 jobs with an average salary of $150,000, the region will benefit from as much as $3.6 billion in spending by Amazon. Crystal City, a community sandwiched in the southeastern corner of Arlington County, Va. — a suburb of Washington, D.C. — landed the other half of what Amazon had billed as HQ2 in a year of competition that drew interest from more than 50 sites nationwide.
The selected locations will give Amazon access to robust talent pools and proximity to international airports, two of its key requirements outlined last year. The Virginia site will be in National Landing, a newly branded neighborhood that also encompasses parts of Pentagon City and Potomac Yard.
[Opinion: Amazon follows the money — to the Swamp]
The Long Island City site, across the East River from Manhattan’s Penn Station train hub, is near both LaGuardia and John F. Kennedy airports as well as Citi Field, home to the New York Mets Major League Baseball team.
“When we start officially hiring here next year, we’ll be able to attract top-tier talent that will help us innovate on behalf of customers for years to come,” said John Shutler, Amazon’s vice president for global real estate.
While splitting Amazon’s new offices between two locations halves the potential benefits to each, it also curbs the strain on highways, mass transit systems, and commuters.
In New York, the city “will look at every conceivable way to increase the amount of mass transit available,” said Mayor Bill DeBlasio. That may include adding a new Long Island Railroad stop and adding shuttle-bus service from the East River ferry.
The effect on the area’s real estate market will be significant. The company’s arrival might signal an end to a recent dip in the city’s housing market, which is known for shorter troughs than other areas, said Janine Yorio, CEO of New York-based Compound Asset Management, which creates real estate investment funds.
Some of the 12,000 apartments added in Long Island City since 2010 will likely be absorbed by the expanding workforce, she added in an interview before the announcement.
Younger workers are most likely to choose areas such as Long Island City itself, a flourishing region just minutes from midtown Manhattan and its stores, theaters, and restaurants, as well as neighborhoods like Dutch Kills and the Brooklyn community of Williamsburg, which is temporarily losing its subway to Manhattan to repairs. Executives might opt for nearby suburbs such as Westchester County and Fairfield, Conn.
While the city has a glut of condominiums, the rental market has remained strong, with occupancy rates of 98 percent, she said. “What’s likely to happen is further upward price pressure.”
Amazon’s decision marks a great day for New York City and an extraordinary one for Queens, de Blasio said.
“It’s something everyone should be very proud of,” he added. “Once upon a time when people thought of New York City, they only thought of Manhattan. We really have a five-borough economy now.”
