What makes you think LIC wouldn't have seen both if Amazon stayed? Your line of thinking amounts to "the fewer big inevestments there are, the more smaller investments will make up for it."
There is limited space in New York. Amazon would have taken up more space and given less tax output. The offshoot businesses have even more limited space. Why would New York give away so much?
If they decided downtown Buffalo is the hq the state should have thrown money at them because that would change the area and provided space for many offshoot businesses. Win-Win
That's a good point that the net gain would be greater in an area like Buffalo. I can see how it's a less desirable locale from Amazon's point of view though. On your other point though, I though Amazon was building their own space, so that problem would be minor. Also, Google is eating progressively more space that already exists, so I'd view their expansions in NYC as a larger issue of taking up very limited space. Regardless of any of that though, I think Amazon brought it on themselves by making the whole process a year long spectacle for, I suppose, marketing issues or something, but it backfired.