Lessons Enterprises Can Learn from Amazon About Locating HQs

NEWS ANALYSIS: The new East Coast headquarters for Amazon is facing strong opposition among New York politicians and community activists, leading the company to reconsider its plans to locate there.

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Amazon executives responsible for the company’s planned move to create a headquarters on the East Coast appear to be rethinking their decision when it comes to the New York location. In November, Amazon announced plans to expand the headquarters for the ecommerce giant to locations in Arlington, Va. and to Queens, N.Y. Each location would have about 25,000 highly paid workers.

However, according to a story in The Washington Post, the level of local opposition to the new headquarters is causing executives at Amazon to reconsider the New York location. In New York, the state government created a set of incentives designed to attract the company but structured those incentives to effectively bypass the local government. Apparently as a result, the local government has appointed opponents to the deal to positions where they have the power to end it.

In addition, community activists are organizing vocal protests, ramping up legal challenges and are convincing politicians who had previously supported the Amazon move to oppose it. Reportedly, Amazon is already considering either moving the entire East Coast headquarters to Virginia, or to other cities that were on the Amazon short list. According to the story in the Post, Amazon has not leased or purchased space for the New York location, and legislative approval for the incentive package there isn’t expected before 2020. Much of the effort by local activists is aimed at preventing the passage of the incentive package.

No Office Space Has Been Procured in NY

The fact that there has been no procurement of office space and no approval of the promised incentives would make a withdrawal of the New York option relatively easy. In addition, some of the other locations on Amazon’s short list have kept their efforts alive, continuing to court Amazon for what they see as an employment bonanza.

At this point there’s no official word from Amazon, but it’s important to note that the Post is owned by Jeff Bezos, Amazon’s CEO. This likely means that the newspaper has some access to Amazon executives. A spokesperson at Amazon responded to a request for comment from eWEEK.

“We’re focused on engaging with our new neighbors--small business owners, educators and community leaders,” the spokesperson said in an email. “Whether it’s building a pipeline of local jobs through workforce training or funding computer science classes for thousands of New York City students, we are working hard to demonstrate what kind of neighbor we will be.”

Unfortunately, there is a vocal minority of New Yorkers who are convinced that Amazon will be a neighbor that they don’t want.

Contrast the opposition in New York with the welcome in Virginia, and you can see why Amazon executives are reconsidering their choice. There the state legislature has already passed the Amazon incentive package, and it’s been signed into law by Gov. Ralph Northam. The county board of supervisors has expressed strong support for the Amazon headquarters and is planning to pass a local incentive package in March.

Queens, Virginia Represent Very Different Environments

One reason for the big difference in whether Amazon is welcomed or not lies in the nature of the locations where the new headquarters would be. In Queens, Amazon is moving into an established area that’s been going through transition lately; it is also where residents are already feeling the pressure of new jobs, rising rents and forced relocations of some local businesses.

In contrast, the Virginia location has a vast collection of vacant real estate following the departure of nearly 20,000 federal employees and contractors starting in 2005 when Defense Department employees were relocated to a nearby army base. This leaves Crystal City with reduced taxes, and with infrastructure designed to support many more people than are actually there. Effectively, Amazon would repopulate a neighborhood and would help Arlington County, Va. with a long-stated goal of revitalizing their community.

What appears to have happened here is that Amazon paid more attention to the incentives offered by New York than in making sure that the neighborhood they planned to occupy was a proper fit. If I had to guess, the effort to keep the location a secret impeded any attempt to reach out to residents and local businesses in advance. In Long Island City, they saw this as a threat. In Crystal City, the federal government’s departure had made clear the threat of empty space, so Amazon was welcomed.

For real estate search committees, Amazon provides an important lesson. One is that there may not be a benefit in too much secrecy if that means dropping a surprise on a community that’s not prepared for it. But more important, it means that any major move into a community requires more than just talking to legislators and government executives. It’s critical to get some kind of buy-in from people on the ground where the facility will be. If you get local support, that’s worth a lot.

New Company Should Be Aware of a Location's Culture

Equally important is to make sure that whatever you plan to build in a location fits into the character of that location. Amazon is already finding this out in its home city of Seattle, and it’s running into opposition in New York because many of the people there don’t think it fits. In Crystal City, the character is quite different because that community was built to house a large influx of government employees, which means that a second influx, this time of Amazon employees doesn’t really change that much.

There are other considerations that play into local support, such as whether there is already a large population of employees that is similar to the workers you plan to move into an area. In Amazon’s case, that means highly-paid tech workers, but for other businesses it could means something else. What this does is help the new employees find an atmosphere in which they will feel comfortable and that their new neighbors will find familiar.

In Virginia, the existing large population of highly-paid tech workers means Amazon will fit right in. But apparently New York’s population is different, and that threatens those people. Unfortunately, threatening people is unlikely to make you a valued neighbor or a welcome guest.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...