Amazon lease for NY space renews debate over failed deal

NEW YORK -- Amazon has signed a lease for a new office space in Manhattan that will house more than 1,500 employees, less than a year after pulling out of a deal for a larger headquarters in the borough of Queens after politicians and activists objected to nearly $3 billion in incentives.

The new office almost immediately renewed a debate over whether the tax breaks and other incentives were excessive, given the likelihood Amazon would continue to expand in New York City regardless because of the city's large talent pool. The online retail giant received no incentives for its new 335,000-square-foot complex in a building near Hudson Yards, a high-end commercial and residential development on the west side in midtown Manhattan.

Amazon said the new office will open in 2021 and will house employees from its consumer and advertisement teams. The Seattle-based company already has 3,500 employees in other New York offices, and the headquarters for its subsidiary Audible is in nearby Newark, New Jersey.

"As we shared earlier this year, we plan to continue to hire and grow organically across our 18 tech hubs, including New York City," the company said in an e-mailed statement.

Amazon dropped plans this year to build a $2.5 billion campus in the Queens neighborhood of Long Island City that was projected to bring 25,000 new jobs over 15 years. The company had chosen Long Island City for one of two new headquarters after a fierce bidding war among more than 200 metropolitan areas that Amazon itself had stoked. The state and city had offered $2.8 billion in incentives that included $1.5 billion in tax breaks and grants, and a helipad near the new offices.

New York Gov. Andrew Cuomo had lashed out at politicians and activists whose campaign helped unravel the Queens project, saying it threatened to undermine New York City's emergence as tech hub and squandered an opportunity for generate money for schools, housing and transit. Critics of the incentives package swiftly cited Amazon's latest corporate lease to argue those fears were unfounded.

"Amazon is coming to New York, just as they always planned. Fortunately, we dodged a $3 billion bullet by not agreeing to their subsidy shakedown earlier this year," New York state Sen. Michael Gianaris said in a statement.

Cuomo pushed back against the reaction, saying the Queens headquarters would have brought in more jobs and the new office will not benefit Long Island City.

"This is crumbs from the table compared to a feast," Cuomo said. "We don't have a problem bringing businesses to Manhattan but we have been trying for decades to get that Queens waterfront developed."

Mayor Bill DeBlasio had blamed Amazon for pulling out of the deal prematurely. His office did so again Saturday, while lamenting that Long Island City had lost out on Amazon's expansion plans.

"Amazon couldn't take the heat and didn't want to work in good faith with New Yorkers. Now, New York is getting just a fraction of the jobs and Queens is getting none of the benefits," said Jane Meyer, a spokeswoman for the mayor.

Even before the deal unraveled, experts said Amazon's choice of New York City underscored that its main concern when it comes to expansion is access to talent at a time of fierce competition for computer programmers, mobile app developers, data scientists and cybersecurity experts. The company is continuing with its plans to build another headquarters in Arlington, Virginia, a suburb of Washington, D.C. that is also a emerging tech hub.

New York has a thriving start-up scene, and big tech companies are already rapidly expanding their presence in the city. Facebook announced a deal last month to lease 1.5 million square feet of office space in Hudson Yards. Google and Instagram have also opened new offices in recent years.

"Ultimately, what Amazon needs is qualified tech talent and that's why it needs to be in New York," said Joe Parilla, a fellow at the Metropolitan Policy Program at the Brookings Institute.

Still, Parilla said the large incentive package was targeted at luring Amazon to one of New York's outer boroughs, which have not benefited from the tech boom like Manhattan has.

"Everyone who was pushing for this investment understood that New York would be fine either way overall. Within that context, they were trying to make a more precise argument, which is that Long Island City was not reaping the benefits," Parilla said.

U.S. Rep. Alexandria Ocasio-Cortez, a Democrat who represents a Queens district near Long Island City, said officials had been offering costly incentives in exchange for a promise of jobs that were not guaranteed.

"The 25,000 jobs figure was a 10-20 year fantasy ... from Amazon, not a promise or agreement," Ocasio-Cortez said in a tweet.

She added that the 1,500 new jobs Amazon is now adding "are for FREE."