Amazon (NASDAQ: AMZN) announced through a blog post this week that it is cancelling plans for its massive New York expansion. Citing difficulties with “a number of state and local politicians,” Amazon will no longer be bringing 25,000 jobs to the city.
The company will not be looking for a replacement location, saying through its blog that “We do not intend to reopen the HQ2 search at this time. We will proceed as planned in Northern Virginia and Nashville, and we will continue to hire and grow across our 17 corporate offices and tech hubs in the U.S. and Canada.”
Amazon’s pullout has been met with mixed reactions.
Some Real Estate Investors Could be Left Financially Devastated
Real estate investors who purchased in the last two months will now own properties that appreciate at far slower rates than expected. Amazon’s presence would have sent prices soaring, and many would have invested based on this fact alone.
While this is unwelcome news for realtors and property investors, it will leave residents relieved. Rent prices would have increased along with property values. Now, rental rates will stay mostly the same in what is already one of America’s most expensive markets.
Significant Job Growth Will be Lost
Amazon would have received almost $3 billion in subsidies to make the New York HQ happen.
In trade, it offered the creation of 25,000 new jobs, along with other long-term economic benefits. The city would have also profited from higher property rates and the prestige that would come from hosting Amazon. Long term, it was expected that Amazon’s presence would attract other large companies. There would likely have also been an influx of smaller ancillary companies.
$3 billion of taxpayer money will be saved, but the loss of economic potential makes it a harsh tradeoff.
Stock Investors May See Price Fluctuations in the Final Session of this Week
Amazon was down -1.06% at the close of trading on Thursday. Stock will likely recover this loss and continue its recent upwards trajectory. Investors should watch prices closely during Friday’s session, before considering a change in position. Long term, the cancellation of this project is not likely to significantly impact Amazon’s financials.
Amazon stock price is currently up 8.03% year to date, slightly underperforming the NASDAQ Composite’s 11.93% growth during the same period.
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