After months of fevered anticipation, Amazon announced in November that they’d be adding an additional headquarters in Northern Virginia. An influx of 25,000 jobs, at average salaries of $150,000, plus a reimagined Crystal City will transform the region in the coming years. It’s an economic boon to be sure, but should Northern Virginians rejoice?
In a region as dense and developed as inside-the-Beltway Northern Virginia, it’s fair to say that Crystal City had been a relative ghost town in recent years. Still struggling to find its identity after losing scores of employees to the Department of Defense’s Base Realignment and Closure project (BRAC) around 2005, the once bustling office buildings found themselves sparsely populated for more than a decade.
But that all changed when Amazon finally announced in November that it would be moving half of its second headquarters to Crystal City (now known, to the surprise of most everyone, as National Landing). Literally overnight, the once sleepy stretch of high-rise offices, residential and retail buildings were in demand.
“We were surprised by the immediacy of the response within the local market,” says Derrick Swaak, treasurer of the Northern Virginia Association of Realtors and a managing broker with TTR Sotheby’s International Realty in McLean. “Our office had a listing for a moderately-priced studio condo adjacent to Crystal City. For weeks, there were few showings and no offers. But once the media began to confirm Crystal City, the listing agent was deluged with showings and ended up with six offers. Half of them were investors looking to seize on the opportunity. I have also received requests from other investors looking for buyer’s agents with specific knowledge of Crystal City and the nearby residential markets.”
That 407-square-foot condo was originally listed for $249,900. It’s final sale price? $255,000. Rising real estate prices and a modern-day gold rush mentality are just a few of the ripple effects the NoVA neighborhood is seeing as a result of Amazon coronating Crystal City America’s hottest “new” neighborhood (that, and the other half of HQ2, Long Island City in New York).
But just as real estate prospectors—and those lucky enough to already own property in and around the neighborhood—are popping the proverbial Champagne, there are plenty of naysayers who see the region’s newest corporate neighbor as a negative.
Rising real estate prices means gentrification and less affordable housing; 25,000 new jobs means even more gridlock and a strain on the region’s Metro system; higher taxes to pay to lure one of the world’s most profitable companies to move here; and even accusations of crony capitalism have all been offered up as reasons that Amazon isn’t what the region needs.
“This historic move by Amazon to bring half of its HQ2 to Virginia will yield good-paying, sustainable jobs that will allow Northern Virginia’s economy to compete globally for decades to come. I’m glad Amazon recognizes that Northern Virginia is a top location to raise a family and grow a business,” said newly elected Congresswoman Jennifer Wexton in a statement when the announcement was made. “However, I share the concerns of my constituents regarding whether we have the necessary infrastructure, including roads, transit, schools and affordable housing, to properly welcome Amazon to our region. I look forward to working with Amazon now and in the future, and call upon them to be a responsible corporate citizen, to ensure that the quality of life of their future employees and current Northern Virginia residents is not adversely impacted by this move.”
Despite these concerns, Northern Virginia’s elected leaders fought hard to lure the online giant here.
Virginia Gov. Ralph Northam, speaking in Crystal City at a press conference the afternoon of the big announcement, declared it an economic triumph.
“Amazon will invest approximately $2.5 billion to establish a major new headquarters here, and plans to create at least 25,000 new jobs,” he said. “In fact, the site where we’re standing right now will transform from an empty warehouse into a significant component of Amazon’s new headquarters.”
So what did the state have to offer in order to win out on that promise of $2.5 billion and 25,000 new jobs?
Some quick numbers: Virginia’s comprehensive incentives package directly totaled $573 million. That’s in addition to $223 million in transportation investments, and even more subsidies potentially reaching up to $750 million if Amazon exceeds certain job creation thresholds. The state also agreed to invest $1.1 billion over the next two decades in higher education technology programs at Virginia Tech and George Mason University.
To the uninitiated, those totals may sound like a lot. But that financial package actually totaled far less than some other locations offered.
Maryland and New Jersey offered much more at $8.5 billion and $7 billion, respectively, yet neither landed the deal. Even the other headquarters Amazon did pick—in New York City’s Long Island City neighborhood—provided incentives equaling an estimated $48,000 for every new job it’s projected to create, more than twice Virginia’s $22,000.
If Virginia didn’t win out on money alone, why did Amazon decide to go with NoVA?
“It has a lot to offer,” Brian Huseman, Amazon’s vice president of public policy, explained at that same press conference. “It has some of the best transit access, with three Metro stations, commuter rail access and Reagan National Airport all within walking distance. The community has a variety of hotels, restaurants, high-rise apartment buildings, retail and commercial offices. It has abundant parks and open spaces, with sports and cultural events for residents of all ages throughout the year. In this location, Amazon will be able to attract the top-tier talent that will help us innovate on behalf of our customers.”
Indeed, urban planners have long held Northern Virginia up as a shining example of what smart development looks like. The Ballston-Rosslyn corridor, spurred by the arrival of the Metro in 1979, essentially serves as an extension of Washington, D.C., with its (usually) easy-to-navigate public transportation options. In Crystal City, i.e. National Landing, existing Metro stations (which also opened in the late 1970s), plus one in the works at Potomac Yards, and development plans from JBG Smith for reimagined retail and residential to support HQ2, stands to transform yet another slice of Northern Virginia into a walkable mecca for millennials.
“It’s us entering a new cycle of relevance and growth,” says John Asadoorian, principal broker for Asadoorian Retail Solutions, who has been an integral player in creating the region’s retail mix for decades and often works with JBG Smith. “The defense industry was the primary driver of growth in the ‘70s and ‘80s. Now it’s more a matter of quality of life: ease of regional access, proximity to D.C. without the hassles of living in D.C., dated architecture and public spaces being redeveloped (and more).”
The Bezos Factor
But most of the 238 bids for HQ2 promised to put the needed infrastructure in place—and when Amazon comes calling, the residential and retail would have followed.
What else might have gotten NoVA the green light?
Perhaps it all came down to Jeff Bezos.
On a personal level, Amazon’s founder and CEO bought the Washington Post for a cool $250 million in 2013, and then in 2016 purchased the largest home in D.C. for $23 million in Kalorama. Notable neighbors include Barack and Michelle Obama plus Ivanka Trump and Jared Kushner.
On the corporate level, Amazon has faced and will face far more potential challenges emanating from the federal city in recent and coming years. D.C.-centric issues include contending for a $10 billion contract with the Pentagon to move military data onto cloud services; pending federal approval on using drones to deliver packages; the Postal Service considering dramatically raising shipping rates in the face of declining usage; and even potential antitrust scrutiny from the Justice Department.
Accordingly, the company has surged its lobbying in recent years, spending $13 million on lobbying in 2017, according to Amazon’s public financial disclosures. That’s more than quadruple the $2.5 million they spent as recently as 2012, according to the Center for Responsive Politics. Amazon did not reply to Northern Virginia Magazine’s requests for comment.
Critics argue that Northern Virginia probably needed to spend zero (or nearly zero), contending that Amazon would likely have picked the area anyway—rendering this whole yearlong competition an elaborate ploy to squeeze more money from the state and region.
“Did the world’s smartest company really need 13 months, and applications from 238 cities, to reach the striking conclusion that it should invest in New York and D.C.?” The Atlantic business writer Derek Thompson wrote in a recent article critical of the bidding process. “The former is America’s heart of capital, and the latter is America’s literal capital, where Jeff Bezos, chief executive of Amazon, already owns a house and a newspaper.”
Amazon on the Horizon
Whatever ultimately tipped the scales in our favor, Amazon is moving in—with some settlers arriving as early as this year.
The company will start hiring and staffing the National Landing location this year, says Amazon’s Huseman. “This is in addition to the more than 8,500 employees we already have in Virginia, and the more than 2,000 employees in our D.C. metro offices.”
All told, official projections are 25,000 jobs each for both the Virginia and New York City locations. According to the most recent monthly employment numbers from the District of Columbia Office of Revenue Analysis, that would represent about 0.4 percent of D.C. metro area residents and 0.76 percent of jobs.
Although that may sound small, that’s actually incredibly large for a single private sector company amid the sixth most populous metropolitan area in the country. Also consider that those jobs will arrive relatively rapidly, at least compared to accumulating over multiple decades as most of the area’s other biggest private sector employers required. For comparison’s sake, there are about 170,000 federal employees in Washington, D.C. (not including active duty military), according to the United States Office of Personnel Management.
Salaries for the new jobs are also expected to keep pace with the region’s high cost of living, with average salary clocking in at $150,000. To fill those six-figure jobs now and into the future, Virginia’s bid included heavy investments in education, like the just announced Virginia Tech Innovation Campus that will open in Alexandria. “Amazon has committed to creating at least 25,000 jobs over the next 12 years, but may grow as large as 37,850. Amazon is more likely to hit the larger target with the state’s investment in K-12 and higher education,” explains Stephanie Landrum, president and CEO of the Alexandria Economic Development Partnership, an organization that played an integral role in the area’s Amazon bid. “The new Virginia Tech Innovation Campus in Alexandria will play a critical role in helping to build a strong tech pipeline, which is why it was such an important investment in our partnership proposal.”
Take the “A” Train
Perhaps one of the biggest bogeymen that comes with Amazon’s arrival is the traffic. You can’t add 25,000 new jobs and not see an uptick in cars on the road. Since complaining about the traffic is a beloved pastime in this region, the promised local investments in public transit were reportedly a focus for Amazon.
Among the pledged developments include improvements to Route 1, more entrances to the existing Crystal City Metro station and the planned Potomac Yard station scheduled to open in 2021, plus a pedestrian bridge from Crystal City to Reagan Airport. Currently the airport is one train stop away on either the Blue or Yellow lines, but with no good way to walk or bike the route.
“At Amazon’s major employment centers now, the majority [55 percent] of their employees either walk to work, bike to work or use some form of transit,” says Paul Smedberg, chairman of the Northern Virginia Transportation Commission.
“Twenty-five thousand people are not going to work for Amazon the first day they open the building. It’s going to be spread out over a period of time,” Smedberg continues. “That creates a really nice framework from which to build. It’s going to enhance the transit and transportation initiatives that Alexandria and Arlington certainly have in place, and also the region.”
On the other side of the equation is the pseudonymous administrator of the popular social media account Unsuck DC Metro, perhaps the leading source of viral complaints about the local transit system.
“I think we all know that Metro has been failing the region for over a decade. There have been several, very expensive attempts to right the ship, but Metro keeps getting worse,” the anonymous author writes by email. “Ridership continues to plummet, so I would expect any new Amazon worker will end up driving to work just like many in the area.”
Amazon has also been developing driverless cars, so could we soon be seeing them on Jefferson Davis Highway? “You never know,” Smedberg says. “They’ve had some cars tested around this area, but in a very limited and very careful way. So it wouldn’t surprise me.”
After 14 months of analysis, rumors and breathless media coverage in every city that threw their hat in Amazon’s HQ2 ring, it’s no surprise that the final decision was national news. The company’s announcement of their two new headquarters locations even sparked a number of jokes. “Amazon was just going to go with New York,” quipped James Corden in The Late Late Show monologue, “but then at the bottom of the page they saw: ‘People who buy New York also buy Northern Virginia.’”
HuffPost reporter Elise Foley earned more than 1,000 likes with this satire: “ANNOUNCEMENT: I am willing to move to a new city. Please join my nationwide competition and tell me what your city has to offer by way of helipads, free zoo memberships, etc. Will increase employment by 1 person.”
All kidding aside, Amazon’s selection of Northern Virginia will continue to be hotly debated for years to come, with everyone putting their own spin on the high-profile corporate move.
One economics professor argues that even the so-called negatives are actually positive.
“It increases our challenges the region faces in supplying affordable housing for our resident workforce and solidifying our transportation system to handle increased demand,” acknowledges Terry Clower, director of the Center for Regional Analysis at George Mason University. “In reality, these are good problems to be facing, certainly better than declining demand for labor and loss of housing value.”
“The under-reported part of this story is how the success of attracting HQ2 will impact the region’s overall ability to attract other firms,” Clower continues. “Nothing draws a crowd like a lot of people, and this is true in economic development.”
While it remains to be seen what the ultimate impact will be on Northern Virginia and its residents, even most detractors may admit landing Amazon is the latest indicator of NoVA’s magnetism, capping off what has almost undeniably been an impressive upswing decade for the area.
“It was a matter of time before the area achieves its potential,” Asadoorian says. “Amazon is the catalyst that will get people to understand and see this.”