E-commerce giant Amazon.com Inc. ( AMZN ) is now on the list of companies receiving $5 million in tax credits for creating jobs in New York. Amazon must now create 500 jobs in 7 W. 34th St. in Herald Square, a property across the street from the Empire State Building.
As per the Empire State Development Corp, Amazon is opening a retail store at the above mentioned site in a building owned by Vornado Realty Trust ( VNO ). The agency offered Amazon credits to attract the e-tailer's office to Midtown Manhattan. But Amazon can qualify for the credit only after it adds 500 jobs at the location.
Amazon's founder and CEO Jeff Bezos announced in October that he intended to set up the first physical store for Amazon. In November, Vornado Realty Trust disclosed a 17-year lease agreement with Amazon for 470,000 square feet of space in which Vornado owns 9 million square feet of commercial space.
Amazon has been searching for a base in New York for the past two years. Amazon's rapid expansion since its inception in 1994 has brought it worldwide fame and success. But fulfillment has become an issue now, particularly since customers now take for granted its speedy deliveries.
The large number of companies jumping on the e-commerce bandwagon and the entry of Chinese ecommerce giant Alibaba Group Holding ( BABA ) have greatly increased competition for the leading Internet retailer. Traditional competitor eBay ( EBAY ) also continues to evolve.
On the other hand, as part of the entitlement program, New York wants to give benefits to well-capitalized companies with market-based incentives to attract them to conduct business in the state. For the purpose, the state committed $480 million in credits to get employment for 106,779 New Yorkers. Companies can claim the credits over 10 years but only after achieving the committed targets.
Amazon carries a Zacks Rank #3 (Hold).
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