Tech

Amazon will open a new office in New York, less than a year after dropping plans for HQ2

Key Points
  • Amazon plans to lease 335,000 square feet of office space in Manhattan, less than a year after the company pulled out of its plans to build part of its second headquarters in New York's Long Island City.
  • Rep. Alexandria Ocasio-Cortez, D-N.Y., who pushed back on the HQ2 deal, claimed the decision as something of a victory since the expansion did not yield the $3 billion in performance-based incentives state and local leaders promised Amazon in exchange for 25,000 jobs.
  • The new space will only bring a fraction of the jobs Amazon had floated for its HQ2. The new space will house more than 1,500 employees, according to The Wall Street Journal, which first reported the deal.
Demonstrators in a Long Island City park in Queens, New York, protest the planned Amazon HQ2 office on Nov. 26, 2018.
Bloomberg | Bloomberg | Getty Images

Amazon signed a deal to lease more than 335,000 square feet of space in Manhattan's new Hudson Yards neighborhood, office realty group SL Green Realty announced Monday. The Wall Street Journal first reported the deal on Friday.

The deal comes less than a year since Amazon announced on Valentine's Day it would halt plans to build its new headquarters in the Long Island City neighborhood of Queens, New York. Amazon and lawmakers who brokered the deal behind closed doors faced pushback from local activists and city council leaders who criticized the nearly $3 billion in performance-based incentives offered to the company in exchange for bringing 25,000 jobs to the area.

To those who opposed the exchange of tax breaks for jobs, the new Hudson Yards space is something of a victory.

"Won't you look at that: Amazon is coming to NYC anyway - *without* requiring the public to finance shady deals, helipad handouts for Jeff Bezos, & corporate giveaways," Rep. Alexandria Ocasio-Cortez, a New York Democrat who represents the region where Amazon planned to build its HQ2, tweeted Friday following the Journal's report.

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But the new lease will bring just a fraction of the jobs Amazon promised as part of the HQ2 deal. The company will have over 1,500 employees at the new site, according to the Journal. Amazon had made clear it would continue to grow in New York even after it pulled out of its HQ2 project there. The new Amazon jobs will also be located in Manhattan, not the developing neighborhood of Long Island City in Queens.

An Amazon spokesperson told CNBC that the new office space will open in 2021 and house employees from its consumer and advertising teams. The spokesperson also said the office is part of the company's previously announced plan to add jobs "organically" in many U.S. cities, including New York City.

Even so, in a separate tweet, Ocasio-Cortez argued the 25,000 job Amazon promised "was a 10-20 year fantasy" rather than a firm commitment.

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New York State Senator Michael Gianaris, who represents the Long Island City district, echoed Ocasio-Cortez's statements in an interview with CNBC's Andrew Ross Sorkin Monday.

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"The argument is that Amazon was coming to New York, they were always coming to New York, and they will continue to come to New York because that's where the talent pool is, that's where their competitors are hiring talented people," Gianaris said, noting Facebook and Google's expansions. "If those jobs are coming anyway, which I believe they are, then we are in fact saving that money for use on other things."

Sorkin pushed back on Gianaris' argument, pointing out the jobs will not be coming to his district with this new deal and recalling that the tax incentives were based at least in part on the numbers of jobs Amazon ultimately brought to the area. Gianaris said he'd still expect Queens residents will end up working for Amazon even though it's not setting up shop in the borough and added that Amazon never made a binding commitment to bring jobs to the area.

Even though the jobs won't come to his district specifically, Gianaris said Long Island City is doing just fine without Amazon. While growth is not happening in such a "splashy" way as the HQ2 project would have seen, it is continuing at an organic pace, he said.

Shortly before Amazon formally ended its HQ2 plans in New York, Governor Andrew Cuomo, a Democrat, pleaded with the public and described what he saw as a huge loss if Amazon pulled out of the deal.

"There is no business that brings 25,000 jobs anymore. They don't exist. I spend days trying to bring a business that has 100 jobs or 200 jobs," he said. "Every project has local opposition. ... People just oppose change."

Amazon is not the only tech giant planning to grow in New York's Hudson Yards. Facebook signed a lease for more than 1.5 million square feet of office space, the development announced in November. The company is looking to expand further in Manhattan, according to a separate Journal report on Friday, which said Facebook is in talks to lease about 700,000 square feet of space in Midtown. Facebook has not confirmed the talks.

"We constantly assess our facilities needs and don't have anything to share at this time," a Facebook spokesperson said.

Amazon still plans to build its second headquarters in Northern Virginia, which it chose jointly with New York following a nationwide scouting effort.

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