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Long Island City may have lost the e-commerce giant, but it got plenty of real estate advertising.
Looking at the real estate market in Long Island City right now, you’d never know the Queens neighborhood is just a few months post breakup with one of the most valuable tech companies in the world.
Back in November of last year, after a 14-month long courtship, the e-commerce giant Amazon had declared its love for Long Island City. The company named it as the location of its second headquarters, known as HQ2, a distinction it also bestowed upon Crystal City, Va. Amazon execs and New York politicians thought that bringing 25,000 high-paying jobs and billions of dollars in capital expenditure to the outer borough locale would make the proposed union a sure thing. But local residents, politicians, and activists fiercely protested the match, especially the $3 billion in tax incentives the city and state had agreed to give the e-commerce giant.
A few months and several disagreements later — on Valentine’s Day, no less — Amazon ended its engagement with the 170,000-person neighborhood and said it would not open its HQ2 in Long Island City after all. Supporters of the HQ2 deal, such as New York’s Governor Andrew Cuomo, were distraught. Cuomo blamed politicians for causing “tremendous damage” and causing “lost economic opportunity.” Others worried about the speculative real estate bets placed after the original HQ2 announcement.
But a survey of real estate data, both commercial and residential, shows that Long Island City is enjoying a growth spell that predated its dalliance with Amazon, one that shows no signs of dissipating.
Long Island City leased more commercial property space in the first half of 2019 than it has in any year since major commercial real estate firm Cushman & Wakefield started recording data on the relatively small New York business district in 2015. More than half of that space was leased in the second quarter — after Amazon pulled out. The space has been leased by existing businesses and newcomers alike.
In addition, Queens had its lowest unemployment rate on record in April — 3.2 percent — and this rate has been historically low for the last few years (the New York Labor Department doesn’t track neighborhood data).
A lot of demand for commercial space is coming from the life sciences sector, according to Elizabeth Lusskin, president of Long Island City Partnership, the area’s business development organization.
“In addition to all the demand already here, this sector is creating new demand and new energy,” she told Recode.
Cushman & Wakefield estimates the area will lease about 1.5 million square feet this year, or about the same amount of space Amazon would have occupied.
Squarefoot, a commercial real estate firm that caters to small- and medium-sized businesses, has seen sustained interest in Long Island City from its clients, as well. After a “clear spike” in requests for property information around the Amazon news, interest in Long Island City has still more than doubled year over year, Squarefoot CEO Jonathan Wasserstrum told Recode.
Amazon’s interest in the area — and the press blitz it engendered — has also functioned as a giant advertisement for Long Island City.
“One of the nice things for Long Island City is that whatever makes it attractive to Amazon should make it attractive to anyone else,” Wasserstrum said. “It allows you to outsource some of the decision-making throughout the real estate process to Amazon. Amazon clearly wasn’t going into this blind. It did its research.”
That research included looking at LIC’s proximity to airports and Midtown Manhattan; its skilled labor pool; and its relatively cheaper real estate, among other assets. The $180 million the city had earmarked for upgrades to the area’s sewers, schools and parks prior to the HQ2 announcement is still happening, regardless of Amazon. Businesses are also still eligible for tax credits for moving to the area, though not as much as Amazon would have gotten per employee. (Amazon, for its part, is still looking for love in New York City, though on a much smaller scale than its LIC proposal.)
Long Island City’s residential market appears to be doing well, too, as judged by growing rental prices, which are an indication of demand. Long Island City rents, already the most expensive in Queens, are rising faster than rents in New York City in general, according to data from real estate site Zillow. In May, LIC rental prices rose nearly 5 percent compared with May of 2018, while citywide prices grew about 2 percent in that time.
How much people are selling homes for in Long Island City has grown much faster than the city at large, according to Zillow, though “home value” — what Zillow estimates people will actually get — is growing at the same rate, about 2 percent year over year in May.
As Zillow senior economist Cheryl Young put it, “There doesn’t appear to be a knock-on effect on LIC from the pull out of Amazon HQ2,” though she added that less buzzy Queens neighborhoods — those that have lower rental prices and are easy to commute to from LIC — might feel the pain of Amazon’s rejection.
All this is not to say Long Island City wouldn’t be doing even better if Amazon had stayed.
“For 40 years, people have been working to attract a major commercial tenant in Queens, in Long Island City, because the value to the people of Queens of having 25-40,000 jobs that pay well, that are in a company that has career paths, that is invested in community, is so great,” Lusskin said.
“The thing that happened with Amazon is the rest of the world had the curtain pulled back and saw what those who’ve been involved locally have seen in the past few years. It’s a bittersweet benefit, but we don’t have to tell people what Long Island City is anymore.”
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