NEW YORK, NY – JANUARY 30: Protestors unfurl anti-Amazon banners from the balcony of a hearing room during a New York City Council Finance Committee hearing titled ‘Amazon HQ2 Stage 2: Does the Amazon Deal Deliver for New York City Residents?’ at New York City Hall, January 30, 2019 in New York City. Some Queens community members and activists say Amazon’s move to Queens will further gentrify neighborhoods in the area and add more stress to an already struggling infrastructure system. (Photo by Drew Angerer/Getty Images)Getty
There’s no doubt about it: Many New Yorkers were upset when Amazon broke the bad news yesterday — Mayor Bill de Blasio and Governor Andrew Cuomo included. On Thursday, the retailer officially backed off its plans to build a headquarters in Long Island City — one that would have brought tens of thousands of jobs, not to mention more than $27 billion in tax revenues to the region.
The loss was momentous.
But not everyone was up in arms at the decision. In fact, some in the real estate world weren’t even surprised.
As Constantine Valhouli, director of research for real estate analytics firm NeighborhoodX put it, things might actually be better for the city without Amazon on the ground.
“Everything will be fine, if not even better than under the earlier agreement,” Valhouli said. “This protracted bidding process for Amazon’s HQ2 has felt like a reality show, where the cities are contestants bidding against each other for the privilege of hosting one of the wealthiest companies in the world. A dramatic twist at the last moment? It doesn’t even feel surprising anymore. It also feels like Amazon has overplayed its hand, and risks turning public sentiment against them.”
Alex Lavrenov, a broker with NYC’s Warburg Realty, even said the announcement of Amazon’s Long Island City location might have just been a “test” — one New York ultimately failed, as evidenced on Thursday.
“I think looking back at these developments, It is actually understandable why they didn’t purchase or lease property right before their initial announcement,” Lavrenov said. “Because right now, it certainly looks like a smart way of testing the waters before jumping in head first.”
Long Island City Is Stronger Than Ever
Despite losing out on the megalith retailer’s new headquarters, real estate pros say Long Island City is still a market to watch — and has been for some time.
The city was named one of the country’s fastest-growing in 2017, and more than 12,000 residential units have been added to the community since 2010 alone. Developers have another 350 projects in the works, and more than 6,600 businesses currently call LIC home. Soon, there could be even more.
According to a June 2018 neighborhood snapshot from the Long Island City Partnership, the community is expected to see a 50% jump in commercial space, with retail space more than doubling, by 2020 — predictions made long before Amazon made its announcement in November. Joe Ben-Zvi, COO of insurtech firm TheGuarantors, says those predictions “should still hold true, if not be surpassed.”
“Amazon’s attention to the neighborhood has proven that Long Island City is a prime location for tech and growing businesses, so we can expect the area to continue to develop, just perhaps not quite as rapidly,” Ben-Zvi said.
It’s no wonder the community is growing, either. In addition to a Manhattan-adjacent location and easy commutes, the city has many tax-abated buildings, which can make NYC living even more affordable for those who call LIC home.
“Long Island City has become a popular neighborhood for Manhattan commuters to reside, and they will continue to reap the benefits of lower rent and easy commutes,” Ben-Zvi said. “Although residential growth and commercial deals may slow as NYC and those involved attempt to digest this news, we expect that positivity and further development for Long Island City is still on the horizon.”
Andrew Barrocas, CEO of real estate brokerage MNS, believes so much in the city’s potential, he’s even making a personal investment in the community.
“It was a home run because of Amazon and even now, it’s still a triple,” Barrocas said. “It will take a little longer to get to the point of what I consider a home run, but it will get there. If you look at the trajectory of what is happening here, it is growing.”
Could Someone Take Amazon’s Place?
Despite bringing serious disappointment to many in the LIC community, Amazon did have some positive impact on the city — at least in the way of PR.
As Valhouli puts it, ‘The fact that Amazon brought attention to Long Island City as a potentially desirable location will only benefit the neighborhood,” he said. “LIC now enjoys a higher profile and greater awareness even than before. Just because Amazon backed out of the deal doesn’t mean that some other company may not sweep in with a counterproposal, especially since this would be a blaze of publicity for the right firm.”
Given that Amazon says it won’t look for a replacement HQ2, it seems the deal’s collapse may ultimately be Jeff Bezos’ loss and LIC’s win.
“If anything, Amazon’s withdrawal has created a significant public relations opportunity for another firm to enter Long Island City,” Valhouli said. “There is now a significant opportunity for another firm to benefit from this chaos, by recognizing that Long Island City is intrinsically a desirable place to locate a corporate headquarters and to signal a willingness to bring investment and jobs here — for a fraction of the subsidies of what Amazon had been demanding of the city.”
Will those other companies take pause though, considering the backlash and political uproar Amazon faced before moving in? According to Nick Terzulli, an attorney for Farrell Fritz who specializes in economic development, it’s a valid concern.
“The Amazon project is a beacon of missed opportunities, and a lesson needs to be learned,” Verzulli said. *Other companies might look at this and hesitate to include NYC in their considerations. As New Yorkers, we can’t afford to have our leaders make the same mistakes again.”