Amazon HQ2: Advanced talks about its second headquarters in northern Virginia

Jonathan O Connell

Reporter covering economic development with a focus on commercial real estate and Trump organization

November 3 at 10:00

Amazon.com has had in-depth discussions about the possibility of opening its second coveted head office in Crystal City, including the speed with which it would relocate its employees, the buildings it would occupy and the way it would be used. including an announcement on the move would be made to the public. , according to people close to the process.

The discussions were more detailed than the company has had on other sites in northern Virginia and other cities in the country, adding that the Arlington site is one of the pioneers of the second northern seat of the online retail giant and its 50,000 employees. jobs.

The company is about to make its choice as Crystal City's largest property developer, JBG Smith, has removed some of its properties from the rental market and local officials have explained how to make an announcement this month. mid-term elections, according to public and private sector officials who requested anonymity because Amazon requested that the selection process be kept confidential. The company could have similar discussions with other finalists.

The 1900 Crystal Drive building covered with a large, colorful tarpaulin in Arlington on October 19, 2018. (Astrid Riecken for the Washington Post)

Two people close to the process said that if Crystal City was selected, Amazon would likely move an initial group of several hundred employees in 1851 S. Bell St. or 1770 Crystal Dr., two dated office buildings that needed to be redeveloped but could be prepared for occupation by their owner, JBG Smith, in nine months or less. The nomination also includes sites in Potomac Court, Alexandria.

"There are a lot of activities," said a person close to the process. The person added that people "look really positive and confident enough. . . . What we do not know is maybe two or three other sites doing the same thing. That's what scares people here.

[[[[Bezos, an Amazon board is visiting Washington, but no announcement of the headquarters is planned.]

But after the publication of this story, Mike Grella, Amazon's director of economic development, posted on Twitter: "Memo to the genie revealing information about Crystal City, VA, as a selection # HQ2. You do not do favors in Crystal City, VA. And stop processing the NDA that you signed up as a used napkin, "he said of the confidentiality agreements that Amazon demanded from the finalists.

Excitement and anxiety

After launching a draw resembling a reality TV show for a second home at the end of 2017, Amazon has effectively halted any disclosure of research information over the past nine months. Twenty finalist cities – many of which have spent a lot of time and money in search of the company – have little information about their current situation, according to officials from four other finalist jurisdictions.

But stock market investors, online betting sites, and business relocation experts all said that northern Virginia was the favorite to establish head office.

Washington area leaders believe the project is losing and that Virginia, Maryland and the district would all benefit economically. Crystal City, with its easy access to public transportation, its proximity to the Reagan National Airport and its office buildings ready to be occupied, has long been considered a serious candidate. The district and Montgomery County are also among the 20 finalists.

[How can the D.C. region absorb an Amazon headquarters if it can’t cope now with gridlock and housing costs?]

Paris sites give Northern Virginia the best chance of reaching the project, and stock badysts have softened their vision of JBG Smith, owner of most of Crystal City, approaching the announcement Amazon. Stifel Nicolaus badysts have recently switched the company from "Sell" to "Hold" and claim that the possibility that Amazon chooses Crystal City has added four or five dollars to the stock price of the company.

In the Washington area, anticipation grows as clues filter out the fact that Amazon is about to make a decision. According to people close to the process, the company had considered making an announcement before the end of October, but postponed it to November.

"They have stated publicly that they want QG2 to be operational in 2019," said one person. "They start working at this level of detail with the finalists. . . . I think it's a very small number of finalists. . . . [The announcement] requires some level of coordination and notice. "

Sharon Bulova (D), chair of the Fairfax County Board of Trustees in Virginia, where one of the sites is located, felt the mood.

"What I feel about residents is enthusiasm," she said. "They are excited about the jobs that Amazon would bring."

It's also anxiety. Months of waiting did not dispel worries about Amazon's potential pressure on already high housing prices, traffic congestion and the gaping gap between wealthy residents and low-income residents.

[With Amazon decision looming, improvements in higher ed, housing gain steam.]

When Bezos spoke at an event organized by the Economic Club of Washington in September, more than a dozen protesters invaded the sidewalk and groups of citizens, sometimes joined by activists unionists, have voiced their concerns about the significance of creating such a dynamic business schools in the region, roads and housing prices.

Even without Amazon, the Metropolitan Washington Governing Council estimated that the region would need to add 235,000 dwellings by 2025 to keep pace with the expected growth in employment.

The arrival of Amazon could bring the target to around 267,000 by 2026, according to a recent badysis by the Urban Institute. At present, the region is expected to add only 170,000 new units by then, and the shortage threatens to exacerbate inequality.

"Whether Amazon comes or not, we have a challenge," said Peter Tatian, Urban Institute. "The current economic growth is benefiting some people and causing problems to others."

Amazon says it plans to make $ 5 billion in capital investments in the city of its choice and that its headquarters has injected an additional $ 38 billion into Seattle's local economy, generating and an additional $ 1.40 for every dollar spent by the company. But its growth has resulted in cracks between the company and Seattle.

Homelessness in the city has increased and Amazon has promised to cancel some of its expansion plans if the city adopts a new big business tax in order to raise funds to solve the problem.

Little transparency of jurisdictions

Bezos and the company recently announced several announcements that could dampen Amazon's brand image when it opened its Q2 headquarters.

Bezos, who is now the richest in the world, announced in September that he would donate $ 2 billion of his own money to support homelessness groups in the United States and create a network of preschools in the United States. underserved communities.

"I do not think it's a coincidence that one of these problems is homelessness," said Joe Parilla, a member of the Brookings Institution. "I think you can make a pretty clear link between the debate that's going on in a lot of these technology clusters and the way it gives Amazon a bit of coverage that invests in these fast-paced markets."

In October, after being criticized for months by Senator Bernie Sanders (I-Vt.) Regarding the treatment of workers, Amazon announced the raising of its minimum wage for all employees to $ 15 per hour.

But the company's demand for secrecy has kept a potentially thorny debate about how much states and cities should be willing to offer to society for its jobs in the background.

Few public subsidies to Amazon from states, cities and counties for the project have been made public, which some badysts believe could lead to a backlash by taxpayers if they were announced as a fait accompli. Maryland has offered a set of incentives worth an estimated $ 8.5 billion, while grants to Newark are estimated at $ 7 billion. On Wednesday, a judge in Allegheny County, Pennsylvania, ordered the release of Pittsburgh's proposal after a court clash with a local television channel. The decision should be the subject of an appeal.

"I was wondering why cities were not more open [with their proposals]and I guess it's because there would have been some distance from what the cities were offering, "said Heidi Learner, chief economist at Savills Studley Consulting. "From the public's point of view, the question is, what is the city hiding or why not share the [those proposals] would actually lead to more tax revenue on the line? "

After Amazon initially asked for more information, some leaders were expecting the list of finalists to be publicly reduced to give the economic development teams of the eliminated cities a chance to move on. thing.

"I think the process escaped them a bit. They probably envisioned a kind of demotion and changed their position on it, "said Jason Miller, general manager of the Greater Washington Partnership, a group of companies.

In addition to tax breaks, some cities have proposed to build or expand roads, transit networks, data networks or airports in the event of Amazon's arrival. Parilla, of Brookings, said it was best to "maximize the benefits of these investments."

He also does not think it makes sense for Amazon, a $ 816 billion company, to insist on a city or state to get a huge grant program. likely to reduce expenses for other services.

"My feeling is that Amazon does not want to repeat some of Seattle's antagonisms," Parilla said. "It's not great that the brand is perceived as unaware of the economic and racial inequalities that exist in the city where it will invest."

The final decision will probably fall on Bezos. He has always demonstrated his independence in this area, for example when he needed a new headquarters for the Washington Post shortly after buying it.

The preferred choice of Post executives and consultants was a planned office building near Union Station, which they touted in Bezos during a tour of potential locations.

This site was the favorite – until Bezos intervened and chose a downtown building.

Now that Bezos is about to make a decision about much larger research in QG2, Washington region leaders are hoping it will not launch another curve.