Amazon in Late-Stage Talks With Cities Including Crystal Ci…


Amazon.com
Inc.

has progressed to late-stage talks on its planned second headquarters with a small handful of communities including northern Virginia’s Crystal City, Dallas and New York City, people familiar with the matter said, as it nears a final decision that could reshape both the tech giant and the location it chooses.

The ongoing talks with some local officials come as discussions appear to have cooled in some of the other 20 cities on Amazon’s shortlist, including Denver, Toronto, Atlanta, Nashville, Tenn., and Raleigh, N.C., according to people familiar with those situations.

Negotiations with the top candidates are likely in slightly different phases, according to the knowledgeable people. In Northern Virginia, Amazon is negotiating with government officials on incentives, while it’s also talking with

JBG Smith Properties
,

a publicly traded real-estate investment trust, about the Crystal City real estate it owns, according to people familiar with the matter. Part of the negotiations involve nailing down the investment targets Amazon would have to meet to qualify for incentives, one of the people said.

New York is still actively talking with Amazon, although it’s unclear how far along they are in the process.

Together, the developments are intensifying anticipation that the list of likely choices is dwindling—even as several of the knowledgeable people cautioned that Amazon hasn’t made a final decision. Some also believe Amazon may announce plans to place smaller operations in runner-up locations. The company has refused to discuss the process publicly except to say it will decide by year’s end. Some people involved think an announcement could arrive this month. Negotiations are fluid and fast moving given they are late stage, and discussions with individual cities could change or fall apart at the last minute.

Amazon is “anything but predictable,” said one of the people familiar with ongoing negotiations in Virginia.

Site selection specialists say Amazon likely is having late-stage talks with two or more cities, and has other cities on hold, in case any one deal can’t be completed.

A group of developers in Dallas, where advanced talks also continue, recently purchased property on a site there that they earmarked for Amazon.

The standing of other cities on Amazon’s list of 20, such as Newark, N.J., is less clear. Chicago and Miami had been until recently in contact with Amazon, but aren’t currently in negotiations, according to some of the people. That doesn’t necessarily mean they are out of the running.

Amazon announced plans more than a year ago to build a second headquarters, triggering an unprecedented bidding process. Amazon said the new site, intended to be a full second headquarters for the e-commerce titan, would bring as many as 50,000 jobs and more than $5 billion in investments over nearly two decades.

Amazon has managed the search with intense secrecy since announcing in January the list of 20 finalists out of 238 cities and regions that submitted proposals. It conducted whirlwind site visits earlier this year and requested reams of data as focused as local high school test scores. The company asked cities involved in the process to sign nondisclosure agreements, and officials have tried to keep proceedings secret.

The process went largely silent over the summer. The Wall Street Journal reported last month that Amazon had made second visits to a handful of cities and was negotiating with some, and that it was leaning toward an urban site.

Amazon Chief Executive Jeff Bezos this past week said the decision will be made “with intuition after gathering and studying a lot of data.” Speaking in an onstage interview with author Walter Isaacson, he said: “For a decision like that, as far as I know, the best way to make it is you collect as much data as you can, you immerse yourself in that data, but then make the decision with your heart.”

Amazon wants a place where it can demonstrate its economic value, but where it isn’t the only giant employer in town. Each of the places still in discussions have advantages that could be attractive.

The D.C.-area has long been considered a front-runner for the process, in part because Mr. Bezos has a home there and owns the Washington Post. It was also the only area with three finalists—Northern Virginia, Montgomery County, Md., and D.C. proper. Odds makers on betting websites have had Northern Virginia as the favorite for most of this year.

Crystal City, which sits just across the Potomac River from Washington, has an urban feel, numerous government offices, and a ready-to-go campus with empty, older office space that Amazon could use. The area has good access to tech talent and transportation, two factors that rank high on Amazon’s wish list.

The Washington Post reported on Saturday that Crystal City was in advanced talks with Amazon.

Amazon wants a place where it can demonstrate its economic value, but where it isn’t the only giant employer in town.

Amazon wants a place where it can demonstrate its economic value, but where it isn’t the only giant employer in town.


Photo:

pascal rossignol/Reuters

Dallas has a lower cost of living and public-private partnership incentives, in the form of tax abatements, grants, infrastructure cost sharing, and other methods to offset project and operational costs. It’s also in Texas, which doesn’t levy personal income taxes.

One potential site there is a 7.2-acre site formerly home to the Dallas Morning News, that sold last week for $33 million to a Dallas developer. The property is across from the Dallas Union Station light rail and Amtrak station, a hub for commuters, and adjacent to the intersection of Interstates 30 and 35, which would satisfy a core preference for Amazon to be in a well-connected urban location.

The Dallas-based developers that bought the site, led by a company called KDC, said in regulatory filings last week that it would pay prior owner A.H. Belo Corp. 50% of the profit if the KDC group agrees to sell the property to Amazon before the group’s purchase closes on Dec. 28. They would pay 33% of the profit to Belo if the property is sold to Amazon within a year of the closing date. A representative for KDC said there has been no word on Amazon’s plans for a potential Dallas location.

In New York, one neighborhood Amazon has explored is Long Island City, Queens, the Journal previously reported. The residential neighborhood is perched on the East River overlooking Manhattan, and is being gentrified by high-rise buildings and young professionals.

Purported leaks about the process have upset at least one Amazon official, Mike Grella, the company’s director of economic development for its cloud computing arm, who hasn’t been involved in the search. “Memo to the genius leaking info about Crystal City, VA as #HQ2 selection,” said a post on his

Twitter

account Saturday, one of several recently complaining about articles on the subject. “You’re not doing Crystal City, VA any favors. And stop treating the NDA you signed like a used napkin.”

Write to Laura Stevens at [email protected], Scott Calvert at [email protected] and Tawnell D. Hobbs at [email protected]

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