Amazon.com, Inc. AMZN is making efforts to expand presence in midtown Manhattan.
The retail giant has signed a deal to lease 335,000 square feet of space on Manhattan’s west side in the Hudson Yards neighborhood to build a large office. It will be located in SL Green Realty Corp.’s building on 10th Avenue. The office is slated to open in 2021.
The new office will benefit the society by creating several jobs. It plans to accommodate more than 1,500 workers in its tech hub. However, the company said that it is not receiving any tax benefits or other incentives for the new office.
The move aligns with Amazon’s motto of expanding business in New York, providing better services to customers, accommodating rapid growth and leveraging the area’s diverse high-technology talent pool.
Amazon.com, Inc. Price and Consensus
Share Price Performance
Amazon’s strengthening of retail position with the help of global footprint expansion and distribution strength remains a key growth driver. Moreover, robust Prime program and its benefits continue to aid the retail business. In addition, rapid expansion of grocery, increasing AWS regions and its growing adoption will continue to aid Amazon’s cloud momentum. Also, rising number of Alexa compatible devices is a major catalyst.
However, increasing expenses on new investments might hurt its profitability.
The stock has returned 15.9% against its industry’s growth of 21.7% on a year-to-date basis.
Amazon continues to ride on strong focus on adding efficiency to business and expansion strategies. New York is often considered the hub of talent, and therefore job creation therein will add efficiency to the company’s production and operations.
However, in February, Amazon unexpectedly dropped plans of building a second headquarter in the Queens borough of New York City. The decision had come following a month of city council grilling and objections raised by locals, politicians and activists regarding its HQ2 plans in the city.
Nevertheless, with this new space in New York, Amazon is likely to have a competitive advantage against tech bigwigs such as Alphabet GOOGL, Facebook Inc. FB and Apple Inc. AAPL, which also have been expanding presence in the city.
Notably, Last month, Facebook announced that it has leased more than 1.5 million square feet at Hudson Yards. Also, Google is leaving no stone unturned to bolster presence in the city on the back of office expansion. Reportedly, the company has announced plans to double talent hiring in the city over the next decade in order to expand the employee base.
Amazon has been expanding on a global basis in a bid to maintain supremacy. In this regard, the company is investing more in fulfillment, technology and content. Although increased expenses may hurt Amazon’s bottom line in the near term, we believe that these measures are necessary to maintain its dominance in this highly competitive market.
Currently, Amazon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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