Amazon Arriving in LIC
Amazon’s long-awaited announcement that Long Island City was selected as the site for one of its two new secondary headquarters has been the main buzz in NYC for the past few weeks. Amazon is not the first tech giant to make a major investment in NYC — since 2010, tech companies like Google, Facebook, and IBM have brought over 80,000 tech jobs to NYC, and Amazon’s new HQ2 will add 25,000 new jobs (10-15,000 of which are expected to be tech positions).
Of course, the biggest question in the real estate community is how the Amazon news will affect the real estate market in LIC and surrounding areas. As of now, it looks like the corporate headquarters will be between 44th Road and 46th Avenue, with the East River to the left and Vernon Boulevard to the right, making the location extremely accessible to the East River Ferry, the Queensboro Bridge, and the Long Island Expressway.
While originally a manufacturing and commercial neighborhood, similar to Brooklyn’s DUMBO, LIC was rezoned in 2001 to allow for residential development, and between 2010 and 2017 the area exploded onto the real estate scene with more than 40 new rental and condo developments. Between 2007 and the end of 2016, prices in the neighborhood rose by more than 46%, with median condo prices today ($1,194,000) rivaling the East Village ($1,195,000) and Downtown Brooklyn ($1,100,000). And for homebuyers who simply want a small apartment, starting prices in LIC are higher than what can be found in Manhattan since LIC has minimal older residential inventory and coops at lower price points.
The most profound effects of HQ2 may be felt in neighboring areas where prices remain significantly lower than in LIC. Currently, the median price in Astoria is $665,000, Sunnyside is $674,000, and Jackson Heights is $482,000. These historically residential neighborhoods are predominantly made up of larger pre/post-war co-op buildings as well as single- and two-family homes. While they may lack the bells and whistles of LIC’s new condos, they offer larger floor plans at a significantly lower PPSF which may prove to be highly desirable for many future Amazon employees. These neighborhoods could become highly sought-after for those who desire more space and less of a “concrete jungle” lifestyle.
The rental market in LIC and surrounding neighborhoods is also likely to change in coming months. Prior to Amazon’s announcement, the Q3 2018 median price for a 1-bedroom rental in LIC was $3,200 — $1,300 higher than the median for all of Queens — roughly in line with the median rent rate in SoHo and Nolita, and higher than both Williamsburg and the Upper West Side. However, LIC rental prices have actually been on the decline since the start of 2016, as a deluge of new units have flooded the market — more than 2,200 new units were added in Q4 2017 alone! Following Amazon’s announcement, we would expect to see a new bump in rents, a decrease in landlord concessions and incentives, and an increased absorption rate of the surplus inventory already on the market. Rents in Manhattan’s eastern neighborhoods, both midtown and downtown, which offer easy ferry and/or train access to LIC, could also be affected, especially if there is an influx of potential tenants during the off-season (i.e October-May).
While it’s impossible without a crystal ball to know the impact of Amazon’s HQ2 on the real estate market, it will be interesting to see what effect, if any, a new wave of West Coast “tech bros” will have on life in NYC.