Yesterday Amazon (NASDAQ: AMZN) announced that it has selected two cities for its new headquarters: New York City and Arlington, Virginia, ending a year-long search. These two sites will supplement the company’s primary headquarters based in Seattle. Amazon said it will invest $5 billion and create 50,000 more jobs with 25,000 employees in each new location. Amazon also announced that it has selected Nashville for a new Center of Excellence for its Operations, creating 5,000 new jobs.

“We are excited to build new headquarters in New York City and Northern Virginia,” said Jeff Bezos, founder and CEO of Amazon, in a news release. “These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come. The team did a great job selecting these sites, and we look forward to becoming an even bigger part of these communities.”

The Arlington location in Northern Virginia will be the company’s Washington, D.C. metro headquarters, located in National Landing, an urban community about three miles from downtown D.C. In addition to parks and open space, sports and cultural events, National Landing boasts three Metro stations, commuter rail access and access to Reagan National Airport within walking distance.

Amazon will invest $2.5 billion in a 4 million square-foot, energy-efficient office space that can be doubled in size as the company expands. In return, as an incentive, Amazon will receive a workforce cash grant from Virginia of up to $550 million based on $22,000 for each job created in the next 12 years if the company creates the high-paying jobs it is forecasting. In addition, the company will get a cash grant from Arlington of $23 million over 15 years from the city’s lodging tax program.

“This is a big win for Virginia – I’m proud Amazon recognizes the tremendous assets the Commonwealth has to offer and plans to deepen its roots here,” said Governor Ralph Northam of Virginia in the announcement. “Virginia put together a proposal for Amazon that we believe represents a new model of economic development for the 21st century, and I’m excited to say that our innovative approach was successful. The majority of Virginia’s partnership proposal consists of investments in our education and transportation infrastructure that will bolster the features that make Virginia so attractive: a strong and talented workforce, a stable and competitive business climate, and a world-class higher education system.”

The New York City headquarters will be in Long Island City in Queens, convenient to mass transit. The New York City headquarters will also receive a $2.5 billion investment from Amazon and 4 million square feet of energy-efficient office space. Amazon will also receive a variety of incentives, including up to $1.2 billion from the state’s Excelsior Program, a cash grant of $325 million from Empire State Development among other incentives.

 “When I took office, I said we would build a new New York State – one that is fiscally responsible and fosters a business climate that is attractive to growing companies and the industries of tomorrow. We’ve delivered on those promises and more, and today, with Amazon committing to expand its headquarters in Long Island City, New York can proudly say that we have attracted one of the largest, most competitive economic development investments in U.S. history,” said New York Governor Andrew M. Cuomo.

Interestingly, Amazon stock dropped after the announcement. As of 7:27 p.m. Eastern, Amazon stock was valued at $1,631.17 per share, down from $1,712.43 on Friday, November 9.

Insider Take:

This is surprising news – Amazon choosing two cities for its headquarters instead of one. When Amazon started searching for new headquarters to supplement their Seattle operation, they asked bidding cities to put their best offers forward. It looks like Washington, D.C. and New York City were the frontrunners in that department, offering huge incentives for Amazon to bring their operations to town. Both states delivered.