Fizzle Of The Week: The NYC Amazon HQ That Will Never Be

Fizzle Of The Week: No More NYC Amazon HQ

Amazon and the city of New York managed to pull off one of history’s more spectacular break-ups this week, with the Valentine’s Day announcement that the city and the nation’s largest eCommerce firm would not be joining forces to build half of Amazon’s HQ2 in Long Island City.

After months of controversy and about a week of speculation that the deal might be in danger, Amazon formally posted its “Dear John” letter to New York yesterday in the form of a blog post that officially pulled the plug on the deal.

“While polls show that 70 percent of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City,” the post said.

And so, NYC HQ2 is off – and according to Amazon, they will not be looking to find a replacement site for the location that was once supposed to house 25,000 new employees. Amazon confirmed that it will instead move forward with plans for Northern Virginia and Nashville, and continue to hire and grow across its “17 corporate offices and tech hubs in the U.S. and Canada.”

Speaking to The Washington Post on the condition of anonymity shortly before the formal announcement was made, one Amazon representative close to the deal noted that at the end of the day, the firm couldn’t see the point of making an investment in an area where it was becoming clear so many local leaders didn’t want them.

“The question is whether it’s worth it if the politicians in New York don’t want the project, especially with how people in Virginia and Nashville have been so welcoming,” the source said.

The question has gone answered – and the answer, apparently, is no.

Though the initial announcement of HQ2 in Long Island City was met with excitement when the news surfaced last year, much of that initial feeling has cooled – or in some cases curdled. Local leaders in the subsequent weeks and months began to complain that being home to Amazon’s second headquarters would present more problems for long-term residents – in terms of rising housing and services costs – than opportunities. Many also questioned the $3 billion in incentives Amazon was offered for opening in New York – funds that many local politicians argued could be better invested elsewhere.

Once it was clear the deal was in danger, New York officials moved to act. On Monday, New York’s City Mayor Bill de Blasio met with New York Governor Andrew Cuomo to work out a strategy to save the deal. By Wednesday, according to reports in Bloomberg, meetings were in still in progress in the governor's office with state officials, union leaders and Amazon representatives. And at least some of the participants in those meetings were surprised at how abruptly Amazon closed down the deal the following day.

Reports indicated that four Amazon executives met in Governor Cuomo’s office with “the presidents of the New York State AFL-CIO, a regional chapter of the Teamsters and his group, as well as some officials from the governor’s office.” The meeting came at the behest of Cuomo, who had hope to find a process to address organized labor's concerns with the project.

Stuart Appelbaum, president of the Retail, Wholesale, and Department Store Union, said he believed that they had exited the meeting with a framework in place for creating just such a process.

"We all agreed to it, and we said the next step was to start drafting language and getting our wordsmiths involved,” Appelbaum said Thursday. “We all agreed it was a productive meeting, and so we were amazed that Jeff Bezos would decide to just cancel – to announce today that he's canceling the project."

Amazon has thus far offered no further comment.

But a number of other people have. Congressional Representative Congressional Representative Alexandra Occasion Cotes – who was elected to represent the corner of Queens in which Amazon had proposed to build last fall – led the uprising against Amazon’s entrance among progressive politicians, and called yesterday’s results a victory.

“Anything is possible: today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation and the power of the richest man in the world,” she tweeted as the news went live.

Others were not feeling quite so victorious, or quite so happy with those who had derailed the deal. First in that line was Governor Cuomo.

“A small group of politicians put their own narrow political interests above their community — which poll after poll showed overwhelmingly supported bringing Amazon to Long Island City — the state’s economic future and the best interests of the people of this state,” the governor said in a statement.

Mayor de Blasio, for his part, was also unhappy to see the deal evaporate, but channeled his anger in a different direction than the governor.

“We gave Amazon the opportunity to be a good neighbor and do business in the greatest city in the world,” he said. “Instead of working with the community, Amazon threw away that opportunity.”

The fizzles this week to hand out are, of course, myriad. There’s the project itself gone. Then there are the reputational fizzles: Cuomo’s, AOC’s, de Blasio’s and, of course, the city of New York’s.

As noted by Kathryn S. Wylde, the chief executive of the Partnership for New York City, Amazon’s adventures in NYC over the last several months have not exactly been a glowing advertisement for the city’s business environment.

“How can anyone be surprised?” Wylde asked. “We competed successfully, made a deal and spent the last three months trashing our new partner.”

And then there are all the people who began investing in advance of the big Amazon move – buying up real estate in Long Island City and popping up property costs by as much as 25 percent, only to find out (oops) that the project isn’t happening. Some of those folks are investors who are used to the risks, but others were Amazon employees who had bought to get ahead of the rush, only to have a home on their hands that they don’t need, which is now worth far less than it was at the time it was purchased.

“Prices went down in LIC 5 percent prior to the original news because of all the inventory. There [were] just way too many apartments,” said Justin Martinez, a real estate agent for Nest Seekers International, noting that the Amazon announcement had turned things around dramatically in terms of movement and interest in the market.

"The reaction is shock,” he noted. “We think prices are going back down to where they were prior to the news.”

There will be a new Amazon HQ – the people of Northern Virginia have been a good deal more enthusiastic, and its local politicians have been a good deal less troublesome. But it won’t be in the Big Apple, it seems.

And while that news seems to sizzle for a small group of people, it fizzled much more, and much harder, for a much larger group.


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The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.