What does Amazon’s HQ2 mean for Long Island City real estate?

Amazon has officially confirmed that Long Island City is one of two locations for its new North American headquarters, along with Crystal City, Virginia. The e-commerce conglomerate will split 50,000 jobs between the two cities; in Queens, that means creating a headquarters of at least 4 million square feet.

Amazon isn’t the first large corporation to set up shop in New York, and it likely won’t be the last. But many are now wondering what Amazon’s presence, and an influx of 25,000 well-paid workers, may mean for Long Island City’s culture, character, and—maybe most importantly—its housing. Additionally, the city’s adult population and job growth has been outpacing its affordable housing stock, and Amazon’s presence in Queens could contribute to the inequality issues the city is already facing.

“Certainly, when a business as big as Amazon comes into a neighborhood, it has to be done right,” says Jonna Stark, an agent with Halstead who works primarily in Long Island City. “I get the idea that many people moved to Long Island City because they didn’t want to live in overly crowded neighborhoods, like many in Manhattan, but there’s still a lot of space in Long Island City—bringing HQ2 here makes a lot of sense.”

Long Island City has, for the past few years, experienced a development boom that has shifted its once-industrial landscape into a largely residential one. In fact, a 2017 study found that the neighborhood has welcomed more new apartments (many of those market-rate) since 2010 than any other neighborhood in the county; by 2020, at least 6,400 more housing units will debut.

As a result, housing costs have been on a steady incline. According to StreetEasy, the median home price in Long Island City is around $769,000, while the median rent is $2,450/month. It’s already the priciest Queens neighborhood; since 2012, the median sales prices has jumped from $509,000 to its current amount, and its rents are significantly higher than the borough’s medians. And with news of Amazon moving in, interest in the neighborhood has already spiked, meaning things could get even more expensive—and quickly.

Amazon notes that the average HQ2 salary will be $150,000/year, and on the plus side, there’s no shortage of high-end developments for HQ2’s well-paid workers to choose from, should they choose to live in Long Island City. But that could still be a driving factor behind price hikes, though not necessarily within the neighborhood itself.

“Rents in Long Island City are already mirroring Manhattan prices so I don’t know if there will be a traumatic impact,” says real estate appraisal expert Jonathan Miller. “But what Amazon may do is force the removal of concessions that are being offered on leases within many new development spaces.”

Though it might not seem like a huge thing, the elimination of concessions in Long Island City’s rentals could spur neighborhoods as far as Midtown or the Upper East Side to see a swell in their rent prices. “Even if rents in Long Island City don’t drastically increase, the outlying areas will still likely become pricier,” says Miller.

According to StreetEasy senior economist Grant Long, the HQ2 news may talso rigger a wave of housing speculation, with homes in less pricey areas—like Astoria, Greenpoint, and Sunnyside—likely to see “some of the largest uptick in demand in the long run.”

But Stark believes that those ripple effects would have likely happened without Amazon’s arrival in New York. “Prices were rising in Long Island City before the announcement, and unfortunately, there will always be people who are priced out as a result,” she says. “They will head to other neighborhoods, which will eventually push prices higher there as well.”

After publishing a thorough analysis on how Long Island City was impacted by a 2001 rezoning, Municipal Art Society president Elizabeth Goldstein is more worried about what the possibility of thousands of new residents will do to an area that’s already facing issues from prior large-scale projects. While the 2001 rezoning was expected to create a commercial hub with around 300 residential units as part of a mixed-use development, there are now more than 10,000 apartment with too few community resources.

“Amazon is coming into a neighborhood where there’s all kinds of distention,” says Goldstein. “There are schools that are operating at 212 percent capacity; the growth of subway stops in Long Island City is outpacing the system’s overall growth by seven times the rate; and parks and other public spaces are being impacted.”

Amazon has promised to build a new school as part of its HQ2 plans, and some of the money it generates will go back into improving Long Island City’s infrastructure issues. But the question remains: Will that be enough?

“The city didn’t get it right last time there was a major rezoning, so it needs to be extra careful about how it proceeds this time around, while also making it a priority to fix some of its previous deficiencies,” says Goldstein. “It’s going to be bad if planning efforts aren’t done thoughtfully and with a significant amount of public investment. But if it’s done right, maybe things will be fine.”