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Move over, NYC — Newark’s the cheaper option for Amazon HQ2, study finds

Karen Yi | NJ.com

The competition to land Amazon’s second headquarters is stiff, but at least one research group is giving Newark an edge: It has all the benefits of New York City — without all the costs.

Newark is one of 20 finalist North American cities still in the running for Amazon’s HQ2, which is expected to bring 50,000 jobs to whichever spot it picks.

The Newark Community Foundation commissioned a study to look at how Newark stacks up to other top contenders in the eastern U.S. The Anderson Economic Group, an independent Chicago-based research group focused on economics and public policy, came back with good news for city leaders.

“Among those sites with access to by far the largest pool of talented workers for HQ2, we have identified the lowest-cost option: Newark,” the report said.

In October, Anderson ranked all the metro areas that submitted proposals to Amazon. Their latest study compared Newark to the five high-ranking eastern cities: New York, Chicago, Boston, Atlanta and Washington, D.C. It analyzed the cost of doing business in each metro area and the available pool of potential workers.

Among the findings:

A larger recruit pool

With the goal of bringing 50,000 jobs to the winning city, Amazon needs to locate in an area with a deep pool of qualified employees.

The New York Metro area, which includes Newark, had the most people working in jobs relevant to potential employment needs at Amazon HQ2 when compared to other metro areas, the study found.

There are about 1.3 million workers in relevant fields in the New York metro area — that’s nearly twice the number in the Washington D.C. metro area, which has about 734,000 people working in relevant jobs.

Those jobs includes areas such as management, business, finance, math, public relations and sales.

Degrees of interest

Newark also has the advantage to draw from a slew of new graduates feeding into the workforce, according to Anderson.

Universities in the New York metro area had the most people studying in relevant fields. In 2016, New York universities awarded 75,000 degrees and certificates in areas like computer and information services, business, marketing, law, electrical engineering, public relations, advertising and publishing.

The Chicago area came in second with about 40,800 degrees in relevant study areas.

11 miles away, $74 million less

Should Amazon open its doors in Newark, it would cost $74 million less than if the company were to move to Manhattan. Moving to Newark is also $17 million cheaper than moving to Brooklyn, the study found.

When comparing proposed sites in the New York Metro area, “We found that Newark was the most affordable option by a considerable amount, due in large part to lower facility costs and in small part to lower tax costs,” the researchers said.

Compared to the other cities in the study, Newark has the third-lowest facility and operating costs, after the Atlanta and Chicago metro areas. However, the calculations do not factor in potential state and city tax breaks.

Middle of the pack

Newark is in middle of the pack when compared to how much it would cost to operate in the five other cities.

While Newark is among the lowest when it comes to facility expenses, the New York metro area has the highest labor costs and taxes. Business taxes in New Jersey are lower than those in New York.

Without including tax incentives, the annual cost to operate a facility in the Atlanta metro region costs: $1.04 billion; Chicago: $1.04 billion and Newark: $1.09 billion. Researchers calculated costs based on 10,000 employees assuming it would take Amazon a while to reach full staffing levels.

New Jersey has proposed a $5 billion incentive plan over 10 years with Newark kicking in another $2 billion. Chicago is offering $25 million a year incentive.

The low-cost option

Though the study takes a narrow look at how Newark stacks up against some of its opponent cities in just two areas, city officials said it reinforced their pitch to the retail behemoth.

“We are at the center of a region that has the most people working in the technology occupations that Amazon relies upon, and our colleges and universities have the most students preparing for tech careers and we have direct access to the most incredible modes of transportation in the country,” Mayor Ras Baraka said in a statement.

“This report also points out that for Amazon, the cost of locating in Newark is dramatically less than New York City.”

Of the cities with the largest access to a pool of talented workers, Newark is the low-cost option, according to the research firm.

The study did not analyze infrastructure, transit options, quality of life, or business-friendly environments.

“Companies can receive all the advantages of the New York Metro area without the huge costs. It’s a win-win,” said Aisha Glover, CEO of the Newark Community Economic Development Corporation. “Other cities have their benefits, but no one can hold a candle to New York and Newark when it comes to the diversity and depth of talent both in the workforce and coming out of our schools.”

City officials have declined to discuss the next steps, though it’s expected Amazon officials will visit the finalist cities.

Read the full article here.

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