Amazon selects Virginia’s Crystal City as site of new corporate hub: what to know

It’s official: Amazon has chosen both Crystal City in Arlington County, Virginia, and Long Island City in Queens, New York, as the future homes of the corporate expansion that the Seattle-based tech giant labeled “HQ2” in a national contest that launched in September 2017 and led local governments to offer billions of dollars’ worth of incentives to Amazon.

The company announced its decision in a release on Tuesday, after the Wall Street Journal and the Washington Post were the first to report it on Monday night, citing people “familiar with” the matter. The reports came on the heels of several news stories last week that said Amazon would evenly split its promised “headquarters” between two localities. Crystal City and Long Island City—situated on the other side of the Potomac River from the District and the East River from Manhattan, respectively—were noted to be among Amazon’s final picks.

The company said it opted for the two locations because of their “strong local and regional talent—particularly in software development and related fields.” “Economic incentives were one factor in our decision—but attracting top talent was the leading driver,” stated Amazon, whose founder and CEO Jeff Bezos owns a mansion in the District and the Washington Post.

HQ2 will help transform the D.C. region into more of a tech hub—including by encouraging other firms to set up or invest in the area—according to the company, officials, and experts. Amazon says it will bring more than 25,000 jobs each to Virginia and New York and pour $5 billion into the overall project. In Virginia, the project will eventually operate across 4 million to 8 million square feet of space and create almost $3.2 billion in tax revenue over 20 years.

But the jurisdictions are also putting more than $2 billion in tax dollars toward the project, which will start hiring employees next year along with a new Amazon operations center in Nashville. The Commonwealth of Virginia and Arlington County have proposed economic carrots to Amazon that likely total about $800 million. They include infrastructure projects and “performance-based” incentives based on the number of jobs Amazon actually makes.

Virginia’s offerings to the company, which previously reached $1 trillion in value earlier this year, were not disclosed until Tuesday, despite records requests by members of the public.

The job-creation incentives for the Crystal City site are projected to amount to $573 million, assuming that Amazon produces 25,000 “Phase I” jobs with an average wage of more than $150,000. The lion’s share of this amount would derive from a state-level “workforce cash grant” of up to $550 million, or about $22,000 for each job hired over the next 12 years. A memorandum of understanding between Amazon and Virginia sets a hard ceiling of $750 million for this grant if the company ultimately produces more than the initial 25,000 jobs.

The balance of the performance-based benefits is to come from a $23 million “cash grant” from Arlington County over 15 years. The county-level grant would derive from incremental growth above the projected tax revenue from Arlington’s “transient occupancy,” or lodging, tax, compared to a 2019 baseline. In a separate memorandum of understanding, the county says its offer is based on Amazon occupying—by 2024—a minimum of 6 million square feet.

Amazon

Moreover, Virginia says it will put $195 million toward infrastructure projects at the Crystal City site, to include improvements to the Crystal City and Potomac Yard Metro stations, a new pedestrian bridge between Reagan National Airport and the neighborhood, and other streetscape changes. Arlington County will also set aside an estimated $28 million from an existing tax increment financing area to yet-uncertain infrastructure projects over 10 years.

That’s not all. The county says it “will assist Amazon in its efforts to obtain” local, state, and federal approvals required for a helipad that the company apparently wants in Crystal City.

In a statement, Virginia Governor Ralph Northam hailed Amazon’s decision as “a big win for Virginia.” Northam added that the state “put together a proposal for Amazon that we believe represents a new model of economic development for the 21st century.” A release from his office notes that Virginia will also invest in computer-focused bachelor’s degree programs at public universities and community colleges, master’s degree programs at George Mason University and Virginia Tech, and K-through-12 tech education and internship programs.

D.C. Mayor Muriel Bowser and Maryland Governor Larry Hogan, whose jurisdictions ranked among the 20 finalists for HQ2, celebrated Amazon’s selection of Northern Virginia for one of two sites. Like Northam, they also used the word “win” to describe the decision’s impact on the region. Bowser said the D.C. area economy would further diversify thanks to Amazon.

Amazon

Although Crystal City and the D.C. region at large have been perceived as favored places for the company for months, Tuesday’s announcement was the first time most observers heard of “National Landing,” the name of the area in Northern Virginia where Amazon announced it would install one-half of HQ2. Branded by local officials and developers, the area includes components of Arlington’s Crystal City and Pentagon City and Alexandria’s Potomac Yard.

“We believe that Amazon will help accelerate the transformation underway in Virginia’s largest walkable downtown,” noted Tracy Gabriel, the head of the Crystal City Business Improvement District, in a statement. JBG Smith, the biggest property owner in the area, controls more than 6 million square feet of office space there, per a website the firm runs.

“As a result of Amazon’s selection of National Landing, JBG SMITH intends to accelerate the planning, entitlement, and development of several projects,” the Chevy Chase, Maryland-based real estate investment trust says on the website. Crystal City is directly adjacent to Reagan National Airport and is accessible through Metro and the Virginia Railway Express.

JBG Smith/Business Wire

What remains to be seen is how quickly Amazon fills its Crystal City offices—and how the resulting influx of new workers and their families affects housing prices, transit, and other quality-of-life measures in the region. Experts disagree about the extent to which HQ2 will pressure the housing market: The most concerned point out that the area already faces a unit-shortage; those who are unalarmed say the region can absorb the anticipated growth.

Yet, it’s clear that home prices in and around Crystal City will probably increase in the short term, barring a burst of new residential development. Danielle Hale, the chief economist at Realtor.com, says residents can expect to see a spike in prices in Northern Virginia as well as “a ripple effect throughout throughout the broader” D.C. region. Median prices in those places are now more than $600,000 and $622,000, respectively, according to the website.

“This win is welcome news for job seekers in the area, which is expecting below-average job growth of 1.9 percent compared to 2.4 percent nationally,” says Hale. “At the same time, the addition of 25,000 jobs will not overwhelm the region, which added over 50,000 jobs in the last year.” It was widely believed HQ2 would go in one place when Amazon began the search.

This post has been updated.

• Amazon HQ2: Why some cities feel like winners, despite losing [Curbed]
• Amazon Picks New York City, Northern Virginia for Its HQ2 Locations [Wall Street Journal]
• Amazon HQ2 decision: Amazon splits prize between Crystal City and New York [Washington Post]
• Amazon HQ2 winner appears to be both New York and Crystal City, Virginia [Curbed]
• Five facts about Crystal City, where Amazon is reportedly in talks to put HQ2 [Curbed DC]
• Is Long Island City ready for Amazon’s HQ2? [Curbed NY]