Long Island City Might Get 25,000 Amazon HQ2 Jobs. Here's Who Would Benefit.
After almost a year of fevered anticipation, Amazon is on the brink of announcing its pick for HQ2. And if recent leaks are to be believed, commercial real estate players in the Queens neighborhood of Long Island City may be the big winners.
Monday, the New York Times reported that Amazon plans to select two locations — Long Island City and Crystal City in Arlington, Virginia — and could split the 50,000 employees over both cities in order to lower the impact on their housing markets and transit networks.
Amazon announced a shortlist of cities for its highly anticipated second headquarters back in January, but despite widespread speculation and commentary over which city would land the campus, the process has been largely shrouded in mystery all year.
Since the news broke late Monday that Amazon could be close to reaching a deal to bring at least part of HQ2 to Long Island City, Eric Benaim’s phone has been going off.
“It’s very exciting news. I didn’t sleep because my phone was blowing up from clients, friends and colleagues,” said Benaim, the CEO of Modern Spaces, who has been in Long Island City real estate for more than a decade and is on the board of directors for the Long Island City Partnership. “Luckily, Long Island City has been preparing for this moment.”
Queens developers and brokers told Bisnow that access to New York City’s talent pool, the neighborhood’s cheaper development sites, booming population and transportation are all part of Long Island City’s calling card. The area is ready for something like HQ2, they said, or it will be soon enough.
“We’re probably geographically the best location for a company like Amazon,” Benaim said, pointing to what he said is a four-minute subway ride to Midtown Manhattan and a 10-minute trip to LaGuardia Airport.
“The only real thing we are lacking is retail," he said. "Other than that retail shopping, we have everything we need.”
The possible location for the campus is not clear, but Benaim said he has heard it could be the Court Square area. There is certainly plenty of office space in the pipeline.
Savanna’s One Court Square will bring 1M SF to the market in 2020 when Citigroup moves out of the building. Tishman Speyer is building a 1.2M SF office project on Jackson Avenue, called JACX, where WeWork and Bloomingdale's are set to open offices.
Developers have been drawn to the area. Normandy Real Estate Partners, Keystone Equities and GE Capital this year spent $39M on an industrial building at 25-11 49th Ave. where the group is planning a 238K SF office building. In May, The Kaufman Organization acquired a 99-year ground lease on the Cardinal Building, a 65K SF building at 21-01 51st Ave., which it will convert to office space.
Some analysts predicted Amazon would snub New York City because it is one of the most expensive places in the world to build, and has a sky-high cost of living. Others, including RXR Executive Vice President Seth Pinsky, have argued the city’s unmatched talent pool could be too hard for the tech giant to resist.
“What Amazon was looking for in HQ2 was a neighborhood that brought all of the benefits of New York City, but had a culture of its own and a culture that it could help shape — that’s Long Island City,” Pinsky said, though he added Amazon's designs on Long Island City are still rumors right now.
RXR also owns a site in Long Island City, and was part of a consortium of developers, including Tishman, Savanna, TF Cornerstone and Silvercup, working on LIC's bid in 2017, Crain's New York Business reported.
“It’s a great neighborhood with great character, and it’s also a neighborhood of development, so new residents can build on the character and turn it into something even more exciting,” Pinsky said.
In its bid, the New York City Economic Development Corp. suggested four separate locations in New York City that could house the new campus — Midtown West/Hudson Yards, Long Island City, Brooklyn's Tech Triangle and the area around the World Trade Center.
Of those areas, Long Island City may offer something of a compromise, sources said. It is easily accessible across four boroughs, and has seen a flood of new housing stock in recent years. Plus it is close to the Cornell Tech campus on Roosevelt Island being built by Forest City. What’s more, the development sites come at a discount.
“The land is cheaper and you can do office as-of-right in most manufacturing zones,” said Slate Property Group principal David Schwartz, whose firm has three projects in Queens. “They may want to have a blank campus … [and] they might want to do something really big and kind of unique.”
Questions will persist about how 25,000 employees in 4M SF of offices — to say nothing of the businesses sure to pop up in Amazon's orbit — would impact the surrounding area.
The subway's 7 train connects Long Island City to Manhattan and is already one of the city's most congested lines. That only figures to worsen when Hudson Yards fully opens at the line's western terminus.
Last week, New York City announced it would spend $180M on transit and sewage upgrades, the New York Times reports. There is also an ongoing effort to rezone a section of Long Island City to allow more density.
The possibility of HQ2 is thrilling for residential developers. A flurry of rental development in Long Island City has forced landlords to offer incentives to fill up their units. In September, more than 55% of new leases signed in Northwest Queens included some form of concession, according to appraisal firm Miller Samuel.
Simon Baron President Matthew Baron said this news could crush any lingering fears that the area has too much rental supply. His firm last month bought out its partner Quadrum Global at ALTA LIC, a Long Island City apartment complex with 467 units.
“I think everyone is very hopeful right now,” he said. “We are ready for it. We think it’s going to be fantastic for New York.”