Newark Says, Hey Amazon, Look Over Here

Newark Says, Hey Amazon, Look Over Here

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Governments have fallen over themselves offering Amazon billions of dollars in tax breaks and other subsidies and, in some cases, free land, prompting criticism from some economists and good government groups.

In New Jersey, Mr. Christie and legislative leaders are offering up to $7 billion in state tax breaks for Amazon. The company already has a substantial footprint in the state, where it has several distribution centers that employ 5,500 workers, at substantially lower wages than are being promised for HQ2. Last year, Amazon announced it would open two more centers, adding another 2,000 full-time jobs.

“They’re talking about doubling already generous corporate tax breaks,” said Jon Whiten, vice president of New Jersey Policy Perspective. “They’re not saying, we’ll invest billions in New Jersey Transit so workers can get to work on time, or in affordable housing so workers can have a decent place to live.”

Handicappers have put New York in the top 10 among the competitors for an HQ2 based on Amazon’s own criteria, which include good public transportation, a skilled work force, the cost of doing business and a location within a metro area of more than one million residents.

Moody’s Analytics ranked New York sixth, behind Austin, Tex.; Atlanta; Philadelphia; Rochester; and Pittsburgh.

But the Anderson Economic Group, a consulting firm that represents companies seeking locations and cities trying to attract them, ranked the New York metropolitan area No. 1, ahead of Chicago, Los Angeles and Boston, out of 35 candidates.

“It’s at the absolute top in the sheer number of educated people and it’s at the top with mass transit,” said Patrick L. Anderson, the firm’s founder. “But it’s at the bottom in the cost of doing business.”

“New York can win,” he said, “but it can’t be in Manhattan, and I doubt it’ll work in Brooklyn.”

That could be the silver lining for Newark, where commercial rents are a third to half of those in Manhattan and Brooklyn. Newark may not have the glamour of New York City, but it’s only an 18-minute train ride away. And market-rate apartment rents — which run about $30 a square foot — are the equivalent of subsidized housing in New York City.

Newark also sits directly above the fiber optic cable spine running along the Eastern Seaboard, allowing companies to tap into some of the fastest internet services in the country and among the least expensive ultra-broadband network.

And downtown, there is a Whole Foods — the upscale supermarket chain Amazon acquired earlier this year — as well as the fast-growing headquarters of Audible.

From left, Senator Cory A. Booker, Gov. Chris Christie of New Jersey and Mayor Ras J. Baraka of Newark at Rutgers Business School on Monday where it was announced that Newark is the state’s official bid in the Amazon headquarters race.

Credit
Bryan Anselm for The New York Times

The city, with its battle-scarred reputation, may seem like a long shot, but Mr. Baraka has pulled together a coalition convinced that Amazon would accelerate the city’s comeback. There is a total of $2.6 billion worth of projects in the pipeline, according to acting Deputy Mayor Carmelo Garcia.

“I think the prospects are great,” said Ben Feigenbaum, chief operating office of Edison Properties, a major landowner in Newark. “All the developers and political leaders know that Amazon would be good for everyone.”

His company is in the midst of converting a 110-year-old warehouse at Edison Place and McCarter Highway into an office building, alongside a new park, Mulberry Commons, which the city is building after a decade of delays.

Broadridge Financial Solutions, which provides technical services to financial institutions, recently announced it would move its headquarters and ultimately 1,000 employees to Newark from Jersey City. Several years ago, Panasonic moved its North American headquarters to a new glass tower downtown.

There are also 7,000 apartments being developed downtown, once a mix of institutions, office buildings, courthouses and government offices.

Many developers were wary when Mr. Baraka, son of the firebrand poet and activist Amiri Baraka, won the mayor’s race in 2014. But he seems to have won their confidence with his focus on making the city better, not on higher office.

And with a quarter of Newark’s population living below the poverty line, he has pushed to extend the downtown development boom to the city’s more impoverished areas in the south and west.

As of this month, developers are required to set aside 20 percent of newly built or renovated apartments for low- and moderate-income tenants. In addition, the mayor has pushed developers to ensure that half the construction crews and half the permanent jobs for those projects are for Newark residents.

“This administration has been an advocate for the progress we’ve made,” said Jonathan Cortell, vice president of L+M Development Partners, “and very much intent on adding their own imprimatur on what we’re doing next.”

Mr. Cortell’s company is best known for converting the long-closed Hahne’s department store on Broad Street into apartments, with a street-level atrium that now includes Whole Foods.

The project, which obtained tax credits and tax-exempt financing, includes 64 apartments for moderate-income households, such as a family of three making no more than $50,100.

Audible subsidized the rents of 20 employees who moved into Hahne’s as part of its Live Local program and helped create a pedestrian corridor between Audible’s building and the rest of downtown.

Two years ago, Audible established a technology venture fund in its building that has so far invested in 37 start-ups, with the hope that they will grow and rent space in Newark.

For the first phase of Amazon’s HQ2 project, Newark is offering space in existing office buildings downtown, including 33 Washington Street and the Gateway Center complex near Newark Penn Station. The second and third phases, which could ultimately include 7.5 million square feet of space, could be built on vacant land or go in at three planned projects: Mulberry Commons, South of Market or Lotus Riverfront.

For the last project, across the street from Audible, Ben Korman, a developer and the founder of Lotus Equity Group, is planning to demolish Riverside Stadium, a minor-league baseball park that was part of an earlier, ill-advised attempt to accelerate Newark’s comeback. The city and the county invested as much as $34 million, but it never drew the hoped-for crowds.

Even before the Amazon sweepstakes started, Mr. Korman’s company planned to demolish the brick stadium to make way for a 2.3 million-square-foot mix of residential and commercial buildings, retail and green space. Amazon could speed up the construction schedule.

“It’ll be amazing if Amazon settles here,” he said during a walk through Newark’s downtown. “It’ll be even more amazing if more tech companies settle here.”

Correction: October 16, 2017

An earlier version of a picture caption that accompanied this article misspelled the first name of the former mayor of Newark. He is Senator Cory A. Booker, not Corey.

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