Long Island City's Amazon effect
When Amazon announced its retreat from Queens amid a backlash from local activists, Long Island City seemed to have lost 25,000 new jobs and billions of dollars in investment.
Instead, two months later, the neighborhood is experiencing a boom: Other companies have grabbed much of the 1.5-million-square-foot, all-glass building that was to be the beachhead of Amazon's Queens expansion, and interest has surged in nearby commercial real estate.
- "It’s an Amazon effect," says Jonathan Wasserstrum, CEO of SquareFoot, a commercial real estate company. “A lot of people now get to piggyback on the work that they did.”
What's happening: In Long Island City, there is a before and an after Amazon.
Before Amazon announced that the Queens neighborhood was one of two surprise winners of its year-long contest to host HQ2, Long Island City was a somewhat sleepy afterthought on the outskirts of glamorous Manhattan — garnering some interest from businesses but not much.
Now, after Amazon's brief recognition made the area an "it" place, it is suddenly a sought-after location with its own, singular cachet.
- Health care company Centene Corporation just signed a lease for 500,000 square feet in the Citi building that Amazon intended to occupy.
- A second big tenant is in negotiations to pick up another chunk of the building, Nicole LaRusso of CBRE tells Axios.
- In March, the month after Amazon left, SquareFoot got six times as many inquiries about Long Island City than the same month last year from other businesses looking to set up shop in the same area.
The spike seems directly linked to the e-commerce giant. Last year, the Brooklyn neighborhood of Dumbo — another up-and-coming mini-tech hub — was receiving the same interest on SquareFoot as Long Island City. But that interest hasn't turned into an outright boom.
- "There aren't many boundaries to Manhattan that are still available and affordable," says Harry Chernoff, a New York developer. "Long Island City is very undeveloped still and relatively cheap. Smart businesses picked up on [Amazon's] interest in LIC."
The big picture: Tech giants like Amazon, Microsoft and Google — magnets for top talent — have turned city after city into superstar tech hubs, beginning in Seattle and Silicon Valley and spreading to Austin and Boston.
But the Long Island City phenomenon suggests something more — that the big companies can anoint outlier neighborhoods, too, even if Big Tech itself does not stay.
And the incoming businesses get to take advantage of some of the same tax incentives that became a rallying cry during the push against Amazon:
- REAP, New York’s incentive program for Long Island City, gives companies up to $3,000 per employee per year for moving to the area.
- While no one incentive package will come close to Amazon’s $3 billion, neither will any single firm create 25,000 new jobs in one go, as Amazon promised. For example, Centene, which appears to be the biggest new get by Long Island City, is simply moving employees, not hiring more, reports Crains New York.
New York State senator Michael Gianaris, who was one of the most vocal opponents of Amazon in Queens, says the tax incentives will serve their purpose if they are given to smaller firms instead of tech giants. “We want to help small businesses get off the ground,” he tells Axios. “Amazon was just a national shakedown.”
For Long Island City residents, who've grown accustomed to cranes cutting across the skyline, the shakeup of the neighborhood comes as no surprise.
I spent a couple of days walking around some of Long Island City's most rapidly developing pockets. A slew of buildings and co-working spaces have sprouted up right next to specialty grocers.
- And the construction of new office buildings is moving steadily inland, inching closer to Queensbridge Houses, the country’s biggest housing project.
- “We are still concerned because these are companies in neighborhoods that are underdeveloped and lack investment from the government,” says Sabrina Jalal, a local activist. “We deserve to decide what happens in our homes, our neighborhoods and our communities.”