When Amazon announced in November that it would bring half of its second North American headquarters, colloquially referred to as HQ2, to New York City, developers and brokers gleefully rubbed their hands together, imagining the prospect of thousands of workers—with a reported average salary of $150,000, no less—moving into Long Island City and the surrounding neighborhoods.
Interest in the neighborhood’s real estate spiked—there was a huge jump in the number of signed contracts from when Amazon made the announcement to the beginning of February, according to data from Stribling—and sellers raised prices in response to the growing demand.
Now, with Amazon’s decision to abandon its HQ2 plans in NYC, the mood in the real estate world is (unsurprisingly) more morose; one developer reportedly called the company’s withdrawal from New York City “the worst day for NYC since 9/11.”
But will it be a disaster for Long Island City’s real estate? “The broad answer: No,” says real estate appraiser Jonathan Miller. “The impact was overhyped, so consequently, the exit will be overhyped.”
Eric Benaim, the CEO of Modern Spaces, a brokerage that he says has 70 percent of the market share when it comes to Long Island City listings, concurs. “This is really sad for the people of New York and Queens,” he says, referring to the loss of jobs and tax revenue—and the boost to local businesses—that Amazon could have brought to the neighborhood. But, he continues, “I don’t think it’s going to affect real estate. We were perfectly fine three months ago [before the Amazon announcement], and we’ll be perfectly fine going forward.”
Indeed, Long Island City real estate was doing fine—better than fine, from an industry perspective—before Amazon selected it for HQ2. A 2017 study found that the neighborhood has welcomed more new apartments (many of those market-rate rentals and condos) since 2010 than any other neighborhood in the county; by 2020, at least 6,400 more housing units will debut. And Patrick Smith, a broker with Stribling who’s been tracking Long Island City development since 2006, doesn’t foresee the demand for those apartments lessening.
“If Amazon came it would’ve been a boon for the real estate industry, there’s no question about that,” he says. But he believes the attention Amazon garnered for the neighborhood was ultimately a “net benefit.”
“Developers are going to feel disappointed, but developers will always look at the silver lining,” Smith says.
There will likely be “a bit of whiplash” in the market, according to Nancy Wu, an economist with StreetEasy. While the firm has a similar outlook as other experts—things will go back to “normal” for LIC—they do see this as a cautionary tale for overeager developers and real estate speculators.
“The Amazon reversal highlights the risk inherent in speculative investment in real estate in the city,” Wu said in a statement. “While the city has enjoyed swift economic growth, turning a quick profit remains difficult, particularly in areas dense with new development.”
That speculative investment, and the possibly higher real estate prices it may have brought to Queens, fueled opponents to the deal, who believed it would make the neighborhood—already one of Queens’s priciest—even more unaffordable. Although prices may not skyrocket as quickly as they would have, Miller cautions against too much optimism that they’ll drop dramatically.
“The affordability challenge that was a lot of the outcry isn’t going to get better,” he notes. “[Amazon] leaving isn’t going to make housing more affordable in the boroughs.”
But it’s unlikely that the status quo will be too greatly affected. “Amazon would have supercharged the Long Island City real estate market,” says Smith. “But without Amazon, the future remains very bright.”