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Report: Amazon In Advanced Talks To Put HQ2 In Northern Virginia

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JBG Smith Crystal City
A rendering of JBG Smith's planned redevelopment in Crystal City

Amazon appears to be closing in on Northern Virginia as the long-awaited winner of its HQ2 competition.

The tech giant is in advanced discussions about selecting Arlington's Crystal City neighborhood, the Washington Post reports, citing anonymous public and private sector officials.  

The discussions are reportedly more detailed than those Amazon has had with other jurisdictions. The Post reports Amazon has honed in on two buildings it could occupy first, 1770 Crystal Drive and 1851 South Bell St. The developer who owns those aging office buildings and many others in the area, JBG Smith, has reportedly taken some properties off of the leasing market. The Post also reports Amazon has discussed making the announcement this month, following the Nov. 6 midterm elections. 

Amazon CEO Jeff Bezos, who owns the Washington Post, spoke at an Economic Club of Washington, D.C., dinner in September and declined to provide new details on HQ2, instead saying it would be announced by year's end. JBG Smith CEO Matt Kelly also spoke at that event, discussing his company's new affordable housing initiative.

If selected, the D.C. area would be the beneficiary of the 50,000 new jobs Amazon has promised, plus a $5B investment and 8M SF of occupied office space. That would give a much-needed boost to Northern Virginia's office market, which has hovered around 20% vacancy for the last several years. In Q3, 20% of Crystal City's 10M SF of office space was vacant, according to JLL.

Amazon's second headquarters would also boost the D.C. region's image as an attractive destination for tech companies and help diversify its economy away from the federal government and its contractors. 

Speculators for months have been pointing to Northern Virginia as a likely landing spot for Amazon. It has been a consistent favorite in betting odds on the competition, and investors have placed their bets by buying large chunks of stock in JBG Smith, which became a public REIT last year. 

Crystal City has been the primary focus of JBG Smith's development efforts since it merged with Vornado's D.C. arm and went public. The neighborhood sits just across the Potomac River from D.C., has two stops on the region's Metro system and is walking distance from Ronald Reagan Washington National Airport.

The developer has signed Alamo Drafthouse to anchor a new retail district it is creating, and it has planned the redevelopment of surrounding properties, many of which are vacant, aging office buildings.

One of the buildings that Amazon is reportedly eyeing, 1770 Crystal Drive, had initially been planned for conversion to residential. But JBG Smith returned to the county in September with revised plans to scrap the conversion and renovate the office building.

Arlington approved the developer's modified plans Oct. 20. Virginia's package of economic benefits proposed to Amazon in exchange for the location has not been made public; Maryland has approved an $8.5B benefit package if Amazon were to locate in Montgomery County. 

Following the Post's report, Amazon Director of Global Development and Public Policy Mike Grella tweeted about the potential leak from someone working on the negotiations. 

"Memo to the genius leaking info about Crystal City, VA as #HQ2 selection. You’re not doing Crystal City, VA any favors. And stop treating the NDA you signed like a used napkin," Grella's Saturday morning Tweet said. 

The Wall Street Journal reported Sunday afternoon that Amazon is in late-stage talks with Dallas and New York City in addition to Northern Virginia. The report said Amazon is in discussions with public officials and with JBG Smith. It said the talks with the three jurisdictions are likely in slightly different phases.

Some cities — Nashville, Denver, Toronto, Raleigh/Durham and Atlanta — appear to have fallen behind in the race for HQ2, the Journal reports.

UPDATE, NOV. 4, 6:10 P.M. ET: This story has been updated to include new information.