The Amazon Effect on NYC Real Estate
Long Island City (LIC) is set to welcome a large influx of new residents. Amazon’s HQ2 is bringing in 25,000 jobs. Besides Amazon, the Gural family is planning to build a $240 million biotech center in LIC. The intention is to reposition an old warehouse near Court Square for lab and office space. With these two big employers coming to LIC, we take a look at what impact these changes might have on the local real estate market, using Seattle as an example.
Amazon set up the first headquarter in Seattle ten years ago. Before that, Seattle’s South Lake Union neighborhood was a “wasteland” with a mess of parking lots, warehouses and industrial buildings. After Amazon went in, offices and residential buildings started to go up and commerce followed. New restaurants, cafés, supermarkets flourished. Now it has 45,000 employees in 33 buildings totaling 8.1 million square feet. Amazon occupies 19 percent of the high-end office space in the city, according to an analysis by the Seattle Times, as many square feet as the city's next 40 biggest employers combined.
In 2010, Amazon had 5,000 employees in Seattle. Today, it has 45,000.
With 40,000 new jobs, Seattle's median rent jumped three times the national figure over the last decade, and the median home value increased 73% in the last 5 years, compared to NYC’s 43%.
Seattle rents increased by $0.11 per square foot, per year between 2011 and 2015.
Zillow economists attribute about $0.07 of that $0.11 spike to the South Lake Union jobs boom. In other words, a Seattle renter with a 650-square-foot, one-bedroom apartment saw her monthly payment increase by about $44 each year between 2011-2015 as a result of job growth in South Lake Union.
Let’s take a look at the current housing supply in LIC, Astoria, Sunnyside, Woodside in Queens, as well as Greenpoint and Williamsburg in Brooklyn. These neighborhoods are within half an hour commute to LIC.
In addition, LIC has a pipeline of around 6500 units coming onto the market by 2020. On balance, the existing supply does not meet the incoming demand. Also, we expect LIC to accelerate its transformation into a highly livable neighborhood, as opposed to the still industrial image many of us have today. We think the neighborhoods mentioned above will benefit from this wave of job creation:
Greenpoint and Williamsburg in Brooklyn, which connect directly to LIC via the G line; Astoria, Sunnyside and Woodside in Queens, which connect directly to LIC via the N and 7 lines.
Please reach out to learn more about these neighborhoods!
You May Also Like:
The NYC real estate market is at an interesting crossroad. On the one hand, we feel a lot of pent-up demand from buyers who have been watching and waiting for rates to go down.