NYC Real Estate Brokers & Landlords Are Salivating Over Amazon Invasion

Christopher Austad, a real estate broker for Douglas Elliman who rents and sells apartments in Long Island City, said that after news leaked that Amazon was coming to Queens, his phone "has been blowing up" with calls from "friends around the country, other New Yorkers, clients, sellers, buyers, everybody wants to know what this means."

StreetEasy searches for apartments for sale in Long Island City soared roughly 300% this past week, according to a release from the website. And Ben Landy, the CEO of Lease Buyout Advisors, a company that, in his words, "helps rent stabilized tenants get the max amount of money from their buyout," said that landlords in the area now have even more incentive to try and pay their rent-regulated tenants to vacate: "It’s gonna be an amazing time for buyouts."

With New York City still deep in the midst of an affordability crisis—a Furman Center reportreleased earlier this year showed that the city's population continues to outpace housing supply, and median rents have increased by around $300/month since 2000, while renters' salaries have only increased by $145—Amazon is promising to bring 25,000 to 40,000 jobs to Queens with an average salary of $150,000.

The current median rent for a one-bedroom in Long Island City is $3,200, which is $1,300 higher than the median for the rest of Queens, according to StreetEasy, reflecting the neighborhood's glut of high-end, glass tower rentals.

Thanks to Amazon HQ2, these apartments "will get absorbed quicker than they planned for, which is great for the developers," Austad said.

"I don’t really think that rents are gonna shoot up crazy. I think if we have a huge increase in rental prices, it’ll come years from now, once this supply is fully absorbed, and there’s not a lot of huge projects coming to market," said Austad, who has lived in Long Island City for over a decade.

"Right now there’s still a nice deal for New Yorkers to be had in Long Island City, and I think the great value that Amazon brings is all the services that come along with it. All the other companies, tech start ups, all of the cool, trendy cafes, restaurants, everything else that comes from it that that area is kind of lacking," he added. "I mean, we just got Chipotle and Starbucks recently."

Hunter's Point South, a middle class affordable housing development built on public land and started under the Bloomberg administration, offers studios for $1,862/month for New Yorkers earning between $65,726 and $120,615 a year. For those earning what Amazon says will be the average salary, there are one bedrooms for $2,992/month and two-bedrooms for $3,936.

"Applications are now being accepted to replenish the waiting list," according to the development's website.

Part of the City's investment strategy for Long Island City alluded to a potential of 5,000 new housing units on private lots around Anable Basin, 1,000 of them affordable. That area is now where Amazon will build its up to 8 million square feet of office space.

At a joint press conference with Governor Andrew Cuomo on Tuesday, Mayor Bill de Blasio was asked about Amazon's role in worsening the affordability crisis in Seattle, where the company is currently headquartered.

De Blasio assured the reporter that New York City is "an entirely different reality," and pointed to NYCHA, the state's rent regulation laws, and his plan to build more affordable housing, as reasons why the same thing won't happen here.

"In cities that don’t have substantial affordable housing, are not building a lot of new affordable housing...then it’s a zero-sum game where that formula you just said is true," the mayor said, adding that affordable housing "requires money."

"All of the affordable housing programs, all the people who are being subsidized to stay in their affordable apartments. All public housing requires money. The tax-base impact here is actually going to be central to allowing us to protect affordable housing, going forward."

The City and the State claim that Amazon will create $186 billion in "economic impact," and that the state and the city will eventually receive $27.5 billion in tax revenue stemming from the move. Amazon could get as much as $3 billion in state and city tax credits and incentives.

"Instead of rolling out the orange carpet for Amazon, Cuomo and de Blasio should be extracting concessions that would benefit struggling residents in Queens," Jonathan Westin, executive director of New York Communities for Change, said in a statement. "They should demand that Amazon pay a gentrification tax to offset the negative impact of rising rents and lost small businesses the company will cause in Long Island City. And they should demand that Amazon hire a significant number of local residents, with a preference for public housing residents in nearby NYCHA developments in Queens."

(De Blasio did address this last point at the press conference: "One of the biggest companies on earth next to the largest public housing unit in the country—the synergy is going to be extraordinary.")

Paulette Soltani, the housing campaign coordinator for VOCAL-NY, called the details of the plan "devastating."

"Instead of giving away money to Amazon, they should be putting that into all of the systems that are failing people right now, like having no housing for the homeless," Soltani said. "We already have Wall Street, we have all of these corporations that have made the city their home base, the flip side of that is that there is still huge poverty across our state."

Grant Long, the senior economist for StreetEasy, says that while some of Amazon's employees will want to live in Long Island City's brand-new high rises, "even if you make $150,000 year, you're not necessarily going to want to drop $600,000 on a 600-square foot studio."

"So that is going to push demand out towards areas like Sunnyside, Greepoint, that might have a little bit more to offer for the price point," Long says. "I think [rising rents] are a fair point of concern for renters in the areas surrounding Long Island City. It will take time for Amazon to ramp up hiring, but I think once they do it will attract a lot more demand to those particular areas."

Long added that this could be the beginning of an outer-borough boom for tech companies.

"I think there's a hope here that Amazon may draw other employers as well, and we could see a big shift eastward in people who are willing to cross the East River to set up shop, so you could see other tech firms following them."

Landy, the head of the buyout company, said that the math for landlords of rent-stabilized tenants has essentially changed "overnight" due to HQ2: "I just think the surrounding areas of Long Island City, Astoria, and so forth, prices are going to go up dramatically."

"A lot of landlords are going to be able to flip the properties and get higher rents, more than they got yesterday, just off the Amazon announcement, so I think for buyout purposes, landlords will overpay for these buyouts given that they could make money on the back end immediately," Landy said.

Landy's company takes 18% of a client's buyout if one is successfully negotiated. He said his company, which he started a year ago after spending 13 years in real estate, is one of a kind. One ad for Lease Buyout Advisors shows an elderly woman being disturbed by her younger male neighbor playing guitar: "Whatever your reason is...to take the buyout."

Asked if he was merely contributing to the most vampiric impulses of New York City's already extremely cutthroat real estate market, Landy replied, "That’s a great question, and I love when I get asked that."

"Saying all I do is incentivize landlords to get tenants out, I don’t believe that’s the correct thought process," Landy said. "Because I’m not getting rid of affordability. We help them get that money so they can do the next thing in life."

He added, "I’m pro-tenants, I’m pro-affordability, but I’m also pro-free market... At the end of the day, these apartments are never affordable for the public. It’s whoever is lucky enough to have them, and that’s it. It’s like winning the lottery."

http://gothamist.com/2018/11/14/amazon_real_estate_rents.php

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