After over a year of dangling the prospect of 50,000 jobs to get various cities to bid for the opportunity to host it’s HQ2, Amazon made the decision to split their second headquarters in two and locate them in northern Virginia and Long Island City. This makes sense as New York City and Washington DC are two of the few places that could easily accommodate such a large influx of workers, though the choice of Long Island City is an interesting one. But how will Amazon moving into Long Island City impact the commercial real estate market?
The biggest impact will be focused on Long Island City. In the past decade, LIC has seen huge amounts of residential development; however, it has had very limited new construction for office space. One Court Square — the Citi building — was built in 1990 and is one of the few office buildings in the neighborhood. Amazon is taking 1 million square feet in this building while it develops it’s new HQ, which will encompass millions of new square feet.
The newfound desirability of the neighborhood means office rents — as well as residential prices — are going up. If you’re a homeowner, a landlord, or an office tenant that just locked in a 10 year lease, this is a good thing. For others, not so much.
With that said, the costs will remain low compared to other tech-centric areas including Chelsea, Flatiron, and others. This is particularly beneficial for small tech firms, as there will now be a new tech heavy neighborhood with lower rents. The large footprint that Amazon will have will make the neighborhood very attractive in much the way that Google’s HQ in Chelsea has attracted numerous other tech firms to the area.
Long Island City will also experience a great deal of new office development, which was the original goal of the 2001 rezoning which resulted in the residential development boom instead. LIC will become a new central business district and will likely eclipse Downtown Brooklyn as the most desirable and fastest growing central business district outside of Manhattan.
While the full impact of the move of Amazon to Long Island City is likely more than a decade away, the opportunities for small businesses have already begun. The neighborhood is now a very attractive place for businesses, particularly tech firms, to have their offices.
If you’re interested in learning more about the opportunity that relocating to Long Island City could provide to your business, contact one of our experienced commercial real estate brokers today.