If Amazon Doesn’t Deliver in New York, Will Long Island City’s Hot Market Cool Off?
Reports late last week that Amazon may be reconsidering its decision to open a new headquarters in New York City has the real estate community there on edge. [realtor.com ]
The online retailing giant was painted as a white knight who would sweep into the Queens neighborhood of Long Island City, bringing masses of buyers and tenants along with it to fill the slew of gleaming, luxury towers that have gone up in recent years and were having trouble attracting new residents.
In the wake of the neighborhood’s selection, real estate brokers reported hordes of buyers and investors descending, prices jumping 10% to 25% overnight and the number of sales tripling and quadrupling.
But community opponents of the plan have been vocal, which reportedly caused Amazon execs’ second thoughts. So if the company decides to go where it’s more welcome, could the party be over for Long island City?
It’s “likely to slow the pace of sales and price growth in Long Island City and surrounding neighborhoods in the short term,” Chief Economist Danielle Hale of realtor.com® said in a statement. But that doesn’t mean that prices will suddenly snap back to where they were, she says.
The qualities that attracted Amazon to the area, having gotten good publicity, “will keep the Queens market humming for the foreseeable future,” she said. Furthermore, a slower pace of growth will be more manageable for existing residents.
Amazon has received quite a bit of blowback from New York City politicians after its selection of the city in November. The company was planning on bringing up to 25,000 jobs with average salaries of $150,000 each to both Long Island City and Crystal City, VA, just outside of Washington, DC. But while Virginia has welcomed the announcement, New York politicians and activists have protested the large subsidies the city used to entice the company owned by billionaire Jeff Bezos. They’ve also raised fears that the local infrastructure, like the already crowded subway system, will be overextended.
The Washington Post reported on Friday that the company could pull out of New York and go elsewhere—which then set off a new wave of support from the community.
One Long Island City real estate broker immediately started circulating an online petition calling for folks to support Amazon coming to the neighborhood. Eric Benaim of Modern Spaces also asked folks to contact their elected officials asking them not to stand in the way of the company.
“Some people think it’s a game of chicken. They don’t really see them pulling out,” says Benaim. “It’s like dating. They need to play a little hard to get now.”
Business has remained brisk, he says. And if the company does opt to open up elsewhere, he just anticipates it will take longer to fill Long Island City’s condo and rental buildings with new residents.
Long Island City, just across the East River from Manhattan, was once better known as an industrial wasteland with some single-family homes sprinkled in. But then it was rezoned for residential development, a piecemeal process over the past couple of decades.
Scores of high-rises have risen along the waterfront in recent years, pushing the median home price in the neighborhood up to $992,500, according to realtor.com data. The local market actually had an oversupply of housing—an anomaly in New York City—that is, until the Amazon announcement.
Long Island City resident and real estate broker Lauren Bennett, of the Corcoran Group, had a buyer who spent several years looking for a three-bedroom condo in the neighborhood, thinking he had plenty of time to find one as more buildings kept coming online. Then Amazon announced it was moving in and “he feels like he missed the boat,” she says. “Overnight, the entire market just drastically shifted.” Prices on properties she represented rose 20% to 25%.
Like Benaim, Bennett doesn’t envision a dramatic price drop if the company does choose to go elsewhere. But the need to get in quick on the ground floor before workers arrive and prices explode will likely disappear.
“Long Island City will still be hot, but I don’t think there will be as much urgency to pull the trigger as quickly,” she says.
For now, folks are a little nervous about how things will shake out.
“They’re definitely concerned, and they’re waiting to see what’s going to happen,”says Long Island City–based real estate broker Rick Rosa, of Douglas Elliman. He’s lived in the neighborhood for 20 years and has been selling homes there for about 15 years. But “the market just can’t change in 24 hours like that. It’s not a stock market.”
One of his clients asked him about Amazon this week—and then signed a deal to purchase a $900,000, one-bedroom condo in the neighborhood in spite of the uncertainty.
So even if the company does go somewhere else, he believes Long Island City is still better off in the end.
“Amazon brought awareness,” says Rosa. “People are saying, ‘This is a cool neighborhood and I want to live here.'”