Long Island City tries to move on after Amazon HQ2 debacle

Long Island City tries to move on after Amazon HQ2 debacle
Copyright 2019 CNN
Long Island City tries to move on after Amazon HQ2 debacle

If you walk around Long Island City on any given day, you’ll see cranes everywhere and new apartment buildings popping up seemingly overnight. Improvements are being made to multiple subway stations. And new businesses are opening, including a liquid nitrogen ice cream shop and a dance studio for kids.

But there is another side to this neighborhood in the New York City borough of Queens. Many parts remain very residential and quiet. Vernon Boulevard, essentially the area’s Main Street, can look like a ghost town on some days. That was supposed to change when Amazon opened a massive headquarters nearby. There would be thousands of new workers looking to spend their tech money on drinks and haircuts and groceries and apartments.

Then it all fell apart.

“Business is horrible. It’s hard. We don’t have foot traffic,” said Gianna Cerbone-Teoli, a Long Island City resident who has owned Manducatis Rustica, a restaurant on Vernon Boulevard, for 11 years. “It was a great opportunity and we didn’t allow it.”

It’s been more than half a year since Amazon decided to scrap plans to build a second headquarters, often called HQ2, in Long Island City after backlash from some local politicians and members of the community over tax incentives, gentrification, affordable housing and more. One of the city’s tabloids called Amazon’s decision, announced on Valentine’s Day, “a breakup for the ages.” New York Governor Andrew Cuomo mourned the decision as the “greatest tragedy” he’d seen in his time in office. In the blink of an eye, the promise of 25,000 new well-paying Amazon jobs — and the economic jolt they would provide — seemed to disappear.

‘Amazon did put Long Island City on the global map’

The ripple effects — both good and bad — can still be felt in this community. For some, like Cerbone-Teoli, it has meant the potential for prolonged hardship. For others, it’s spelled unexpected perks.

Katie Furr and her fiance Peter Amos said Amazon helped them secure a “good deal” on a two-bedroom apartment in June. They began seriously looking for a home in Long Island City after hearing about Amazon coming to town.

“While we were looking, Amazon pulled out,” said Furr. “That actually worked to our advantage. … A lot of the sellers got scared, so we were able to find a place and make an offer below the asking price.”

No HQ2 is good news for renters, too. “Rent would’ve gone up. That would have been my number one concern and really only concern,” said Christina Galbato, who moved to Long Island City in October 2018.

Some real estate brokers previously told CNN Business that prospective buyers asked to make offers without even seeing apartments amid the excitement around Amazon coming to town. While interest isn’t quite at the same levels as before, real estate agents say there is at least one silver lining: Amazon helped raise awareness about the neighborhood.

“Amazon did put Long Island City on the global map. People don’t really get us confused with Long Island anymore,” said Eric Benaim, CEO and founder of Long Island City-based real estate firm Modern Spaces. “The world knows about us and there is still a lot of interest in coming here.”

In the six months after Amazon canceled plans for HQ2, 160 more units were sold by Modern Spaces in Long Island City than in all of 2018, according to the firm’s data. SquareFoot, a commercial real estate startup, also said Long Island City is getting more interest than before: In August, it ranked 12th in inquiries among the 44 New York City neighborhoods listed on its website. In August 2018, Long Island City ranked 21st among inquiries.

Even so, Benaim laments the lost potential of Long Island City becoming the next big tech hub. “It would’ve been great to have this neighborhood as the next Silicon Valley and see all the new changes that would’ve happened,” he said.

Trying to fill the Amazon void

Long Island City has already been able to fill some of the void Amazon left behind.

One Court Square, a towering office building known as the Citibank building, was initially going to house Amazon employees beginning this year. Amazon was supposed to lease 1 million square feet of space in the 1.5 million-square-foot tower.

Telecom giant Altice, which could have been displaced by HQ2, was able to keep its offices in the Citibank building as a result of Amazon pulling out. In June, it signed a lease for over 100,000 square feet of space, with the option to add more floors later. St. Louis-based health care company Centene has also reportedly agreed to lease as much as 500,000 square feet in the building, according to Bloomberg. Centene and Savanna, the real estate private equity firm that owns the building, declined to comment.

Bloomingdales and parent company Macy’s are moving about 3,000 employees to Long Island City beginning in 2020, although this was in the works before Amazon picked its HQ2 locations. A spokesperson for Macy’s told CNN Business that Amazon’s withdrawal didn’t give it pause.

Elizabeth Lusskin, president of the Long Island City Partnership, a local development group involved in the HQ2 process, said companies are attracted to the neighborhood for the same reasons Amazon was interested. Those qualities include its workforce, proximity to Manhattan and Brooklyn, easy access to airports, institutions such as the MoMa PS1 museum and a place where residents can both live and work.

“It wasn’t like Amazon pulled out because they spent time here and suddenly realized it wasn’t the neighborhood they thought it was,” she said. “All of these things remain, now just more people are aware of them.”

But it’s clear an opportunity has been lost. Beyond jobs, Amazon had promised to create career training programs for local residents and to bring in over $27 billion in new tax revenues expected over the next couple decades, which could have been used to improve subways, buses and build affordable housing in the neighborhood. Now that source of funding is gone, said Lusskin.

“This was a unique situation to say the least,” she said. “Nothing like this has ever happened before, and I don’t know that anything like this will happen again.”