AMZN Long Island City

Have they specified what types of positions will be there and the payscales?

I have heard speculation about the positive impact on LIC real estate, and that makes some sense to me, but I don't know whether the pay will merit that enthusiasm as opposed to creating demand out in Long Island and other parts of Queens.

They are very likely $100k-$200k undergraduate/master's degree educated professional jobs with some senior people getting more. LIC is well suited for that income level. I am sure it will help other parts of Queens as well. At the end of the day, even if they add 5000 employees, that is incremental demand for 5000 apt shares/apartments/home. Multiplier effect will be a big add-on as they people use local services.

As far as I know they are largely white collar jobs. However I think people will be disappointed if they think 25,000 jobs are going to come rushing in : the first job won't show up for a few years or more and the rest will come phased in over 10 years.

https://www.wsj.com/articles/carlyle-group-fund-bets-on-long-island-city-1534969647?mod=cx_immersive&cx_navSource=cx_immersive&cx_tag=contextual&cx_artPos=6#cxrecs_s

I wonder how many Pfizer employees have moved to Hudson Yards?

Does any one know when HQ2/2 will actually open? I saw stories that they are already negotiating office space in the building occupied by Citibank. Once they have the office space, they can start to put new hires who do not want to move to Seattle there. They have had a lot of problem moving people from East Coast to Seattle.

How's Carlyle's stock doing since that acquisition?

30, That single investment is not a driver of stock.

https://www.wsj.com/articles/amazons-move-to-long-island-city-sparks-condo-frenzy-1542116117?mod=mhp

And now it is official: https://blog.aboutamazon.com/company-news/amazon-selects-new-york-city-and-northern-virginia-for-new-headquarters -- an interesting read.

The "pin" amazon used to show LIC on the map is right at Anable basin, one of the rumored site choices.

Here is the Memorandum of Understanding. The planned sites/lots are in Attachment A.

https://d39w7f4ix9f5s9.cloudfront.net/4d/db/a54a9d6c4312bb171598d0b2134c/new-york-agreement.pdf

er, blocks.

Thank you. While Amazon in lic will not make any difference to high end inventory >3k per sq ft, it will be interesting to see impact on rentals and starter new condos.

I was reading that the $100K plus jobs will be in Crystal City. Then the article mentions that the minimum wage for the NYC jobs would be $15.00. I therefore concluded from the article that higher paying jobs would not be that plentiful in LIC.
I haven't seen any other additional information.

I suspect the article was mostly speculatory. I'm guessing both with be equally professional level. The lower paying jobs will all likely be in the center of excellence in TN.

The Amazon blog post specifies jobs in NY and VA will average 150k+. This may be average over the ten year period, so possibly lower earlier and higher in later years.
It also mentions $48k NY tax incentive to amazon per worker, which in my rough calc is a bit over one third of the income tax those workers will pay to the state/city in the period.

Sippel thanks for that link. Very interesting to see the source material.

I think it is a win-win for all as Amzn will bring increased tech ecosystem to nyc and reduce reliance on financial services. They clearly could have chosen another city.

Amazon was coming to NYC. They figured out a way to extract as much money as they could in order to do exactly what they planned to do anyway. This is a huge give away.

30, Not sure that agree with you. They could have gone to Jersey City without losing access to labor pool. They had the leverage and high tax states need to pony up more than low cost states. I can see how one may think that they would have come for 30 or 50 percent less concessions. But no concessions, no large HQ2/2.

Here is a another view saying that it does matter whether AMZN comes or not and tax dollars should not be used to support big firms over small firms who do not have the leverage. A valid principle but it is not reality. NYC needs to continue expansion to keep paying pensions.

https://nypost.com/2018/11/13/nyc-shouldnt-be-begging-for-amazons-new-jobs/

It's from a year ago but relevant again because of news on Amazon HQ2:
https://www.nytimes.com/2017/09/21/opinion/incentives-businesses-corporations-giveaways.html

Any thoughts on how to play this as a retail investor? LIC cap rate were unattractive before the rumors even hit. There never was that much condo inventory (post 2013). Other than City lights building (land lease building with significant maintenance increases), there really isn't much.

Unless you think psqft spread between LIC and manhattan closes, which seems unlikely for a lot of the poorer construction LIC projects.

The wsj article about mainland Chinese LIC buying hysteria last weekend makes it seem like you should buy on rumor and sell on the news.

I do not think there is a play for retail investors except that entry level condo inventory and luxury rentals in LIC will get cleared out and market sentiment may turn from negative to neutral-positive. Areas around Grand Central - Turtle Bay and Murray Hill - may benefit over the years due to 7 train proximity. For retail, transaction costs negate any investment play in NYC unless it is just safekeeping.

Long Island will benefit as well due to the LIRR stop within the campus.

Good point about long island. For any employees with families, they could get a very nice house in Nassau County for $1m, as opposed to a 1200 sq ft 2 BR condo in LIC for $1.6-1.7m.

The large firms will draw the small firms. This is great for the city's economic diversity. It is also great for communities with East River ferry stops.

Even the Hamptons may very well benefit.

Also the Hudson Yards area has access to the 7 train.

How many people making +/-$150k do you think are living/moving to Hudson Yards?

30, WSJ supporting your view that Govt has no business taking away money from some tax payers and give it to a rich corporation when Google and others have opened offices in NYC without subsidies. I agree with the principle but reality is different if you wanted AMZN opening a large office here which in my opinion is certainly good for NYC economy.

https://www.wsj.com/articles/amazons-golden-fleecing-1542230916?mod=mhp

Think any tax incentive should always be properly considered in its full context, the ROI. It will be fairly easy for the city to recoup the $1.5B in incentives over a decade. NYC and CA budgets rely much more on cap gains taxes than most, as a result our income streams are much less reliable. Additionally, it is good to diversify away from finance.

Well, ideally the city and state should lower local taxes to a competitive level so that they do not have to offer these incentives to selected rich corporations but we know that to cover the future pension costs and to placate the unions, the city has no choice but to offer this type of incentive to draw new talent.

It's a slippery slope. NYC went through this many years ago granting tax breaks to companies who were threatening to leave when their leases expired. Where is the cutoff of where to tell businesses when they matter enough to get tax breaks? 25,000 jobs? 10,000?
How about 4 million jobs? That's the number employed by small businesses in NY. But the SBJSA can't get passed because "we need to let the free market decide"? NB I'm not a fan of the SBJSA as written. My point is it's the only proposed relief for small businesses in NYC, it's been held up for 30 years based on it allegedly being anti-free market, but Amazon comes along and all of a sudden "free market" gets thrown out the window and replaced with "but job creation!"
Over the next ten years, small businesses will create way more than 25,000 new jobs in NYC and won't require having a private helipad being built to do that.

30, I agree that large employers have unfair negotiating power. However, the fundamental issue is out of control pension expenses and welfare/subsidized housing expenses which push up state and local taxes. Higher taxes than normal taxes have the city and state offering tax breaks to large corporations who have the choice to move elsewhere. So freeloaders with no/low income still freeload, top corporations get a break, and the "employees" and small/mid sized businesses are stuck paying for it.

What I'm reading is they're opening a branch here because much of the talent they seek refuses to live in Seattle. Similar to companies moving back office to JC and having to come back here because employees balked at working over there. IMO the city is its own draw and many of these tax breaks are unnecessary.

I visited a friend at citylights condop yesterday in LIC. There were easily 50 Chinese prospective buyers in the lobby. Their agents probably not telling them about the 50% increase in maintenance the next 5 yrs. Can't underestimate the Chinese herd mentality though (both ways).

Wow! If this level of interest continues, very good for LIC market. I am sure there will be spillover effect to other areas in Queens or even Manhattan close to Grand Central due to 7 train.

I think there will be a spillover effect in most of Manhattan.

Here's the first listing I found to try and capitalize. It will be interesting watching.

https://streeteasy.com/building/vere-condominium/805

See also

https://streeteasy.com/for-sale/long-island-city/status:open%7Cdescription:amazon

If I were looking to buy to take advantage of the new AMZN headquarters, I think I would start by looking at traditional bordering neighborhoods such as Elmhurst, Jackson Heights, Woodside etc. that offer good transportation to LIC, good services, and reasonable prices. and condos can be sublet which could offer good returns.

the better play is long term. People buying the developers out of their overbuilding mistakes in LIC are going to overpay in the short term. Since Amazon will build out and hire employees over 10 years (there is no guarantee that they get close to 25,000 in NYC, could also go over as well; no one knows)the better long term play is to look at homes/apartments along the Port Washington line on the LIRR. Commute to LIC on the LIRR from mineola, long island for e.g. is only 15 - 20 minutes. Even quicker closer in to the city

If they get to 25,000 employees I predict you will see the commuter flow head back to long island, which will put more pressure on NJ and Westchester county to do something about their ridiculous property tax burden

Even the conservative National Review is coming out against this deal.

I think Woodside is a better bet than Jackson heights or Elmhurst since one can take the LIRR from Woodside to Hunters Point station.

http://nymag.com/intelligencer/2018/11/amazon-cant-monopolize-new-york-city.html

This article is right on.

I find it interesting that almost every claim of financial betterment from this deal ignores the added cost of having 25,000 new families - like for schooling their children, added police and fire protection, water and sewer, etc

There will be obvious positives but it will take YEARS

Realty firms said searches in the neighborhood have increased by as much as 500 percent since early November, when news teams began identifying the northwest Queens neighborhood as one of two locations selected for a future Amazon headquarters. A significant portion of the interest seems to be coming from investors, some of whom probably expect the rent they will be able to command there to skyrocket once the e-retailer moves into the neighborhood, an analytics firm said.

Short term, market rents are unlikely to surge anytime soon, given that a development boom has left the area with hundreds of vacant apartment!

Nicole, NestApple

I agree Nicole. And remember than none of those jobs are coming for at least 3 years. There may be temporary construction jobs in the interim, but those people won't be moving to LIC.

https://www.governor.ny.gov/news/op-ed-governor-andrew-m-cuomo

https://www.bisnow.com/national/news/economy/starwood-ceo-barry-sternlicht-on-amazon-trump-and-the-economy-95052#ath

Cuomo using the Foxconn deal to argue why the Amazon deal is good is just another example of his disdain for his constituents and how he thinks we are idiots.

Whether it is right for cities to offer incentives to selected business debate aside, it seems LIC real estate will clearly benefit as money taken from other tax payers is being spent there.
https://www.wsj.com/articles/amazon-employees-join-the-rush-to-buy-long-island-city-condos-1542709801?mod=mhp

https://www.wsj.com/articles/amazon-primed-to-boost-property-prices-in-winning-hq2-cities-1542715200?mod=mhp

I read that by the second quarter of 2019, there will be some jobs since Citigroup will be vacating some space.
https://www.crainsnewyork.com/real-estate/citigroup-making-way-amazon-moving-long-island-city-employees

But if they are taking the space vacated by Citibank is there actually a net gain?

I don't know if there's a net gain. If one assumes that the Citigroup employees that will be leaving the building lived in LIC, then no.

https://www.wsj.com/articles/half-of-queens-amazon-jobs-wont-be-tech-positions-1542829226?mod=hp_lead_pos1

You can read it half empty or half full. But imho, if true, the actual results missed the lofty expectations for AMZN HQ2 headquarters which was at first 50k tech jobs in a secondary city, to now 12.5k tech jobs in two different cities, over the course of many years.

Still a positive for LIC longer-term especially now that you have a floor and a put w/ AMZN, but I think you need to assume a more conservative absorption rate in the near and mid-term for all the rentals. Which still doesn't bode well for all the euphoric buying of LIC condos priced at sub 3% cap with the 10 year at 3.1% and rising.

The best and critical (and highest paying) engineering roles will still be at main headquarters in Silicon Valley/Seattle. Probably similar to working at JPM in Newport vs. 270 Park.

If you are an incredibly talented engineer, you are most likely in Silicon Valley. It's not just because Google and Facebook are hiring, but there are a plethora of tech startups to jump ship at any given day (from friends that work in the FAANG). It's just not the same outside of Silicon Valley (pay, opportunities, etc) w/ the exemption of some NYC quant HFs hiring. Great article btw by the New yorker recently about uber and google.

NYC rebubble, While you may be right about too much excitement about LIC due to Amazon and low cap rates for multifamily, I disagree about talented engineers flocking to Silicon Valley only. I know some very senior people (think top 50 employees) at Google who work from NY office as they have roots here. I also know senior people in Silicon Valley who want to move back here. Many Israeli tech companies strongly prefer New York. That is the biggest reason tech firms are setting up NYC offices despite pay being comparable. They are not necessarily going to Newark for cheaper labor and cost of living.

I think Brick City is a very hard sell for tech people. It's no Newport.

300,
Don't you think your arguments all point to Amazon coming here from the get-go no matter what incentives they were (or were not) given? And now that it turns out that only about half of the half of the promised jobs will actually be tech jobs ( https://www.marketwatch.com/story/amazon-has-revealed-that-just-half-of-the-positions-at-its-hq2-locations-will-be-tech-jobs-2018-11-21 ) how do you compare the cost/benefit from the tax breaks given to Google and Facebook for bringing thousands of tech jobs to NY?

Plus you have to add the cost of whatever alternate location needs to be procured for the 1,500 units of "affordable housing" which is being displaced from the planned LIC site.
https://www.politico.com/states/new-york/albany/story/2018/11/15/amazon-deal-will-disrupt-plans-for-affordable-housing-on-long-island-city-sites-700784

It is a very complex issue. Ideally govt tax incentives to corporations selectively should be banned globally or at least nationwide as they are in EU (Or local taxes should be equal everywhere). However, selective tax incentives are not banned in the US which leads large corporations to negotiate the best deal at the cost of other tax payers.

If as a state/city you do not negotiate, you may lose. Google and Facebook were just poor negotiators. I am not sure if Amazon would have come to NYC without tax breaks. They could have gone to Jersey City with substantially the same access to the talent pool as LIC.

But they couldn't have gone to Jersey City because they weren't even in the running (probably because no adequate development site exists in Jersey City which met Amazon's criteria especially proximity to transportation). If you are negotiating don't you look at what the actual alternatives are? Jersey City is a straw man.

And... it's gone.

https://www.nytimes.com/2019/02/14/nyregion/amazon-hq2-queens.html

Amazon said on Thursday that it was canceling plans to build a corporate campus in New York City. The company had planned to build a sprawling complex in Long Island City, Queens, in exchange for nearly $3 billion in state and city incentives.

But the deal had run into fierce opposition from local lawmakers who criticized providing subsidies to one of the world’s most valuable companies. Amazon said the deal would have created more than 25,000 jobs.

Well people in Queens voted for a socialist congresswoman.

It will be interesting to see if this causes a measurable change in number of "In Contract" that goes back on the market in LIC/surroundings.

Remember there was a bit of "insider trading" with Amazon employees signing contracts before the public announcement of the deal which sparked a frenzy of buyers calling LIC brokers and even saw some owners raising prices on units that had been sitting on the market going nowhere (I wonder what those sellers are going to do now?).