Amazon has pulled out of deal to establish a second headquarters in New York, after substantial pushback from local city leaders. In exchange for tax breaks and other subsidies, Amazon was to build a second major corporate office in Queens, a move they said would create 25,000 jobs. Polling has shown that most New Yorkers, particularly those in the neighborhood where the headquarters was going to be located, supported the move. If the deal was clearly economically beneficial, and supported by the people it would be directly affecting, why did it fall through?
“For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term. While polls show that 70% of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City.
We are disappointed to have reached this conclusion — we love New York, its incomparable dynamism, people, and culture — and particularly the community of Long Island City, where we have gotten to know so many optimistic, forward-leaning community leaders, small business owners, and residents.”
Local politicians were so vocally opposed to Amazon that the company felt a major deal with the city was not in their best interest. This isn’t particularly surprising once you read some of the things the city’s leaders have been saying. One state senator compared Amazon to a “petulant child.” Congresswoman Alexandria Ocasio-Cortez celebrated on Twitter when reports first surfaced that the company would be reconsidering the deal. In short, the citizens supported the deal, but the politicians opposed it. This is another example that shows the people running New York may not be as open to investment, innovation, and growth as they need to be in order to justify the extremely high real estate prices which lead to the extremely high-weightings cap that cap-weighted indices give them.
Should nearly 30% of all your office investments be in a city whose politicians all but deliberately rejected a deal that would have created 25,000 jobs to fill out that office space?
The index I work on has substantial investments in New York office space, but not as high as a cap-weighted index.
We’re not anti-New York, but a weighting of 28.74% doesn’t look particularly attractive in light of the way that the city’s leadership has handled this major economic opportunity.