WHAT if Amazon did an about face and bid adieu to locating HQ2 in Long Island City, stating that the rancor over subsidies, additional demands, and outright opposition to gentrification made it untenable. How would that make you feel? [Read more…] about BE CAREFUL WHAT YOU WISH FOR
Since it cost a lot to win
And even more to lose
You and me bound to spend some time
Wondering what to choose
I have read the 32-page Memorandum of Understanding (MOU) between Amazon and NYC/NYS. I have read most of what others have written on the HQ2 deal and incentives. I am a financial analyst by training. Most importantly, I have lived in Long Island City for ten years and have closely tracked all that goes on here, both economically and non. Despite all these attributes [Read more…] about AMAZON HQ2 IN LONG ISLAND CITY, GOOD DEAL OR NOT?
First let me state that every detail about Amazon’s locating half of their HQ2 in Long Island City is purely conjecture, including the possibility of their actually coming here, which Vegas currently handicaps at 1:4. Thus as much as I want to share more of my opinions on what, for better or worse, will be the most transformational news to effect LIC, I will hold my tongue until any official announcement. Because the devil is in the details.
Nevertheless considering the high probability (1:4 = Yes, not 4:1), I will entertain and analyze a rumor, even if it turns out to be a meaningless exercise – or completely wrong. That rumor is
Anyway, there would be two major positives for Amazon to choose this site, and one major negative, plus a whole bunch of minor +/-’s that I won’t bother fleshing out here. Positive number one is that it will allow the company to build a campus from the ground up, tailored to what they need in terms of amenities and aesthetics for attracting today’s white collar workers. Positive number two is the free advertising given the full visibility of the waterfront by both everyone in Manhattan and all the tourists – whether they be on the ferry, Circle Line, or even viewing on TV. It’s a headquarters and a showcase. The big negative? It’s not really near a subway line. Everyone who works there would have to trudge 7-9 blocks through Hunters Point if they arrive by subway, or add a mini-leg to their commute via shuttle-buses.
Food for thought, and while we’re on that topic, here are some non-Amazon LIC links:
Adda’s Canteen Style Dishes – The New Yorker pays homage to our new local Indian restaurant
Bryce Harper Moves Into a Long Island City Apartment Building Where 4 Mets Currently Live – wouldn’t it be cruel if he signed w/ the Yankees?
Two weeks ago I drafted a post on local property values in response to the headlines announcing LIC’s first billion dollar condo building. It questioned the viability of attaining $1 bil in an increasingly softening market. The Amazon HQ2 announcement blew that thesis out of the water. It’s a game-changer so back to the drawing board I went with some new real estate predictions, and while I was at it some other thoughts I had on HQ2 as well as some rumors.
Upon confirmation, raw land prices and development sites are immediately worth 25-75%1 more. Because all other costs (labor, materials, financing, etc.) are fixed, this is the only variable that moves so the total project only increases by 5-15%. This is obviously a huge boon for current land-owners.
Retail – 3+ yrs away before any impact on revenues for local retailers but all retail rent rollovers will incorporate an Amazon Premium, especially those near where HQ2 is actually located
Rental Building Owners – the announcement fully counters the current softness as far as refinancing goes. Owners can now do so using peak 2016-17 pricing
Renters – zero effect for the next 2-3 years. If softness persists, as it should with all the supply, concessions will increase but posted rent levels will stay flat. Then when Amazon starts moving in the concessions will disappear.
Homeowners – the effects will not be so immediate, but prices in LIC should firm 5-10% over the next 12 months. Going forward they will do 2-4% a year better than other NYC neighborhoods for the next five years.
For those looking to make a personal investment, if HQ2 is placed in Court Square or Queens Plaza, I believe the highest expected return going forward will be in Astoria and Sunnyside. It will be slightly less so in Greenpoint (but all those new developments just got a big lift), unless HQ2 is placed in Hunters Point. IF YOU WANT TO SCORE A BARGAIN START LOOKING NOW, and be ready to place a bid once confirmation comes.
As for where HQ2 will be located, that’s complete speculation at this point. One name thrown out for a turnkey foothold, is the Citi building where Citicorp’s departure in 2020 will open up one million square feet.
Or, if Amazon wanted to build a quasi-campus from the ground up, there are numerous parcels in Court Square/Queens Plaza that could be rezoned/repositioned and the multiple subway lines that merge there make it a logical choice.
Finally, there is a rumor that the Plaxall property on the waterfront would be a very attractive option, which when grouped with Water’s Edge and Vernon Swamp is where Amazon could build its own version of Hudson Yards on a highly visible (and large) piece of land…
Thoughts – now that the bake-off is seemingly over, I find it interesting that Amazon decided to completely discard the lower cost-of-living factor in choosing DC and NYC. While some think the whole exercise was a sham and the fix was in, I believe Amazon came to the conclusion they needed world class talent to grow going forward. For all that can be said about cities like Dallas and Atlanta, when you wake up in the morning you’re still in Dallas or Atlanta, not NYC.
The details about the deal the city/state struck with Amazon have yet to be revealed, and until they are I hesitate to give the company’s arrival my endorsement – this could be another instance of Foxconn in Wisconsin whereby the state basically paid for the factory and subsidized the workers to have it located there 2. Nevertheless this decision has the chance to be very favorable for both the company and Long Island City, not to mention NYC.
Yes, there will be collateral damage as it won’t be as affordable as before and there will be some really big winners who just won the lottery (the aforementioned land owners). As for crowding – particularly in the subways, an issue that I have been highly critical about, by placing the workers in LIC as opposed to Manhattan, it will fill the empty subway cars deadheading back to Flushing in the morning and Hudson Yards in the evening. Or better yet, commuters can easily walk or bike to work.
If the deal is struck and it’s reasonable, it will cement Long Island City’s standing as the best place to live (and work) in the best city in the world. And I guess that’s what Amazon thought too.
Despite the delays and cost overruns at the Hunters Point Library, I personally like it. I know that not everyone in the neighborhood shares my sentiment, some thinking it an overpriced folly and others questioning the need for any new libraries in the 21st century. But grand projects that may come across as impractical or wasteful at onset, can sometimes transcend their original purpose, as well as transform a neighborhood if the conceptualization of it is on target. Though we won’t really know for another year about the final outcome, I’m optimistic that the decision to build it will be proven correct.
Yet underlying the creation of the Hunters Point Library, is a dirty little secret: [Read more…] about THE DIRTY LITTLE SECRET OF HUNTERS POINT