After dropping its plan for an incentive-packed expansion with 25,000 employees in New York City, Amazon also said it has no current plans for further expansion in Seattle after about 2 million square feet of buildings under construction open up in the coming years.
Amazon has no immediate plans to grow in Seattle beyond its offices under construction now, and the 25,000 jobs intended for New York will be mostly spread across its various North American tech hubs outside Seattle now that the company has canceled the Long Island City part of its HQ2 expansion, the company said Thursday.
The company announced in a surprise blog post Thursday morning that it was canceling plans for a second headquarters in Long Island City, New York, in the face of contentious debates about the size of the tax incentives it was offered and the potential impact on the area.
The reversal came just a few months after Amazon unveiled its intentions to split 50,000 jobs between New York and Northern Virginia. The company also said it would not reopen its HQ2 search.
Thursday morning, an Amazon spokesman said for the first time that 14 million square feet – its current Seattle footprint plus buildings under construction now – “will be the completion of our Seattle campus.”
Later Thursday, the spokesman walked back those comments, saying he misspoke and that it’s possible in the future that the company could choose to expand in Seattle again, although he declined to provide further details.
“We currently have more than 9,000 open roles in Seattle and will continue to evaluate future growth,” the company said in a statement Thursday afternoon.
A spokesman said Thursday that the jobs intended for New York still will be created, just mostly in other cities. The focus will be on the company’s 15 U.S. offices outside its Seattle headquarters, which include New York, the Bay Area, Los Angeles and Boston, plus the Canadian cities of Toronto and Vancouver.
Seattle could still get some of those jobs or benefit indirectly, though it’s too early to say, the company said.
Amazon last said a year ago that it had 10 million square feet of offices in Seattle, about one-fifth of the city’s Class A office space, the biggest share of any company in any big city in America. It now says it has 12 million, the equivalent of adding three huge skyscrapers in the last year.
Amazon had said previously that it planned to grow to at least 14 million square feet based on its current and planned construction, though the ultimate size of its Seattle headquarters was unclear.
The growth to come — that extra 2 million square feet for its footprint here — is still huge; no other company in Seattle has that much Class A office space, in total. So hiring will continue as the company moves into those new buildings, which will likely take at least a couple of years since those offices are under construction.
Amazon has slightly more than 45,000 employees in Seattle, up from 40,000 a year ago, and is by far the city’s biggest employer. As of Thursday, it had about 9,300 open positions in the city.
Local reaction
Amazon backed out of New York after some officials and community members there raised concerns about $3 billion in tax incentives, backed by Gov. Andrew Cuomo and Mayor Bill de Blasio, offered to one of the richest companies in the world.
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It follows Amazon’s threat last year to pull back its Seattle expansion if the city adopted a new head tax. The City Council passed, but then quickly repealed, the tax.
“I believe the head tax debate here in Seattle had a little something to do with laying the foundation for these conversations that happened in New York,” said Seattle Councilmember Lisa Herbold, who traveled with Councilmember Teresa Mosqueda to New York last month to debrief officials there about Seattle’s experience with the company. “I’m optimistic and hopeful that what has happened in New York raises the bar for all cities.”
“A large employer like Amazon coming to town means yes, they will bring good jobs and investment, but there are costs associated with it,” such as increased housing prices and traffic, she said.
Mosqueda said Amazon’s decision to walk away from the negotiating table there “doesn’t show corporate leadership.”
“Cities rely on economic stability, but we’ve learned important lessons in Seattle: We can’t be a company town without strong reciprocal relationships with the businesses that rely on our workforce and infrastructure for success,” Mosqueda said. “We can’t allow companies to build booming profits on our infrastructure, labor and tax breaks without protections in place for the workers and infrastructure that fuels their growth, and the accompanying public policies in place to ensure these values are adhered to.”
Redfin CEO Glenn Kelman said that while he supported Amazon’s efforts in New York, it’s clear companies need to do more to help cities, not just the other way around.
“I think it’s a wake-up call, for everyone in tech especially. If we’re going to create this incredible prosperity, we also need to be really active as corporate citizens and community members,” Kelman said. “That isn’t the first instinct of many tech companies.”
He noted it also sends a clear message to cities dealing with Amazon: “Amazon is not to be trifled with,” he said. “Amazon has the courage of its convictions like almost no other business.”
Gov. Jay Inslee, in an emailed statement, said that “here in Amazon’s birthplace and home, they continue to expand.” He noted the current job openings and future real estate expansions already on the books, adding to “what’s been dubbed by many the Cloud Computing Capital.”
In all, the company has about 44 office sites in Seattle, mostly in South Lake Union and the Denny Triangle.
In addition, the company has two large offices it occupies or plans to occupy in downtown Bellevue. It’s unclear if the company could grow more there.
New York deal
Democratic U.S. Rep. Alexandria Ocasio-Cortez, New York City’s new liberal firebrand, exulted over Amazon’s pullout.
“Today was the day a group of dedicated, everyday New Yorkers and their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world,” she tweeted, referring to Amazon CEO Jeff Bezos.
The swift unraveling of the project reflected the growing questioning of large technology companies among liberals and populists who accuse big business of holding down wages and wielding too much political clout, analysts said.
“This all of a sudden became a perfect test case for all those arguments,” said Joe Parilla, a fellow at the Brookings Institution’s Metropolitan Policy Project.
Tom Stringer, who has been doing economic development deals for over 20 years and is managing director of BDO in New York, offered two main takeaways from the New York-Amazon divorce.
The first lesson, he said, was to involve as many local officials and community groups as possible throughout the process. Amazon and some top leaders in New York had announced the deal in November, to the surprise of many there.
“That is just simply poor economic development 101,” Stringer said. “It’s profound economic development malpractice that the governor’s office and Amazon are guilty of.”
Second, Amazon’s HQ2 search stood out because it was public.
“Do this stuff in private,” Stringer said. “This beauty contest, this baiting of different localities, it’s not economic development, it’s greed run amok.”
The Associated Press contributed to this report
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