Amazon has built a trillion-dollar brand on delivering what it promises. The resulting street cred leaves little doubt that the digital retailer can make good on commitments not only to create thousands of jobs with a new northern Virginia headquarters office but to buoy growth in the surrounding region.
The question is how visible either accomplishment will be in the Washington, D.C.-area, which is already experiencing an economic boom.
The expectations, encouraged by Amazon itself, are high. The Seattle-based company’s decision earlier this month to split a second headquarters between New York City and “National Landing” — a term coined to describe the collective Crystal City, Pentagon City and Potomac Yards neighborhoods — came with plenty of frills and fanfare, capping a year-long beauty contest in which U.S. communities jumped to offer incentives from billions of dollars in tax breaks to private parking spots at a nearby airport.
While the joint selection means the Commonwealth of Virginia wins only half HQ2’s originally-promised 50,000 new employees, officials still touted it as a major victory entailing more than $3.2 billion in benefits. Amazon’s expansion will help drive “a strong and talented workforce, a stable and competitive business climate, and a world-class higher education system,” Democratic Gov. Ralph Northam promised in a statement.
“The world will be watching to see how we capitalize on this opportunity,” Russ Ramsey, who also serves as chair of the Greater Washington Partnership, told reporters recently.
But labor-market gains already under way may mask the payoff for the region’s taxpayers. In July 2018, nonfarm employment in the Washington, D.C., area stood at roughly 3.4 million, up 2.3 percent from the year prior and the fourth straight year-over-year increase, according to data from the U.S. Bureau of Labor Statistics.
“It’s not going to make any difference,” Brendan O’Flaherty, an urban economics professor at Columbia University, said in a recent interview. Fortunately, the pain that can accompany more rapid growth — in the form of congestion and higher housing prices — may be obscured as well.
The tech giant has over a decade to add the new positions, giving the region ample time to accommodate the influx and curbing any near-term spike in costs, according to Colin Johnson, former president of the District of Columbia Association of Realtors.
“All these other industries that are seeing this region as a key player, most folks are already reaping the benefit of that from a real estate perspective,” he told the Washington Examiner.
Amazon’s decision will raise housing costs “only marginally above the rise that is expected to occur without these households,” according to the Stephen S. Fuller Institute at George Mason University.
While both Johnson and the institute expect accelerating housing demand with Amazon’s HQ2, the institute, which studies economic development in the D.C. area, says it “would be relatively dispersed in the region and occur gradually, allowing jurisdictions to plan for the increase or adjust their current plans as needed.”
Current residents will also benefit from some of the improvements designed with Jeff Bezos’ company in mind. Virginia officials predict an annual investment of more than $15 million in affordable housing and public infrastructure, including funding from Arlington County and the city of Alexandria as well as revenue from Amazon’s expansion.
On top of the $573 million in tax incentives — including a $550 million cash grant if Amazon meets specific job-creation targets — the Commonwealth agreed to transit improvements including new entrances at several metro stops and a pedestrian bridge connecting Crystal City to Ronald Reagan Washington National Airport.
Virginia Tech said it would construct a new “Institute for Digital InnovAtion” — a 400,000-square-foot building for technology education projected to cost $1 billion — in nearby Alexandria, Va. The commonwealth plans to devote a portion of a $375 million investment towards the new education center, which the university will be required to match.
Other improvements in the area were under way prior to Amazon’s decision. On top of a $1 billion renovation at Reagan National that includes construction of a new regional concourse, carriers like Southwest Airlines and American Airlines are planning to increase their flights at the airport.
In a call with investors in September, American’s top executive cited Reagan National as one of its most profitable hubs. The carrier — the airport’s dominant airline — plans to adds direct flights to Memphis, Tenn., and Oklahoma City in 2019, as well as more routes once the new concourse opens.
Southwest, the site’s second-largest operator, is also adding a non-stop route to Oklahoma and increasing flights to Nashville, Tenn.
Area-business owners like Ted Leonsis, chief executive officer of Monumental Sports & Entertainment, proclaimed Amazon’s move brings the area “one step closer to being a leading super-region for innovation and talent.”
Others, like the Greater Washington Partnership’s Ramsey — who heads Ramsey Asset Management, said the decision adds urgency for local leaders to advocate for new “smart policies in housing, transportation and education.”
