By Michael Comandini
Amazon’s search for its new headquarters has come to an end as it announced its two new locations: Crystal City, a Washington DC suburb, and Long Island City, Queens.The announcement sparked both excitement and criticism among New Yorkers. While it is expected to create tens of thousands of jobs and pump tremendous revenue to the city and state, some feel the lack of involvement outside of Governor Cuomo, Mayor de Blasio, and Jeff Bezos and the neatly $3 billion in subsidies to Amazon to be a cause for concern. Let’s break down the details of this deal and see what it could mean for New York.
Amazon will build a 4 million square foot (or bigger) campus on the East River waterfront.
This area is currently zoned for manufacturing, but the state will override local regulations by using a General Project Plan (GPP), the same plan used to expedite several other major NYC developments. The city and state will also be granting nearly $3 billion in subsidies, utilizing such programs as the city’s Relation and Employment Assistance Program (REAP) and Industrial & Commercial Abatement Program (ICAP). They will also be granted a capital grant and excelsior credits if their job creation goals are met. The campus is also being built on the a newly appointed “opportunity zone,” which opens the possibility for even further incentive.
Opportunity zones were created under the new tax code to allow people to invest capital gains in distressed areas to deter taxes on those gains until 2026.
Amazon will also lease 1 million square feet at One Court Square, also known as the Citigroup Building, as well as construct a new private helipad.
New York will benefit from the $27.5 billion in revenue that the state projects to see over the next 25 years. Amazon will create 25,000 new jobs and is projected to create 1,300 construction jobs, and over 100,000 in direct and indirect jobs. Amazon will be utilizing the city’s Payment in Lieu of Taxes (PILOT) program to fund the new local infrastructure in amounts estimated to be between $600 to $650 million.
Amazon will allot $5 million to workforce development, job training sessions, and job fairs to the local Queensbridge Houses. They will also build a new school, which will contain a tech startup incubator.
The announcement has caused a spike in real estate activity in the neighborhood and surrounding areas. Once slow sales galleries for new development housing projects are seeing a large uptick in activity. Investors are flocking to the area in hopes of getting in before the undeniable property value increases. Just one month after the announcement, the 3% average price discount has vanished and more projects have been announced. It is also expected that HQ 2 will help the struggling Midtown East new development sector as it is just 1 -2 subway stops away from LIC.
The secrecy of this deal and the lack of involvement outside of Cuomo, de Blasio, and Bezos and the nearly $3 billion in subsidies being offered has caused backlash. State and local officials as well as members of the community feel that terms of the deal need to be renegotiated to make this a good fit everyone. Being that this is still in the very early stages, that is something which is possible.
It will be interesting to see how this all plays out in the coming months. Let’s hope this is the indeed the victory that Cuomo and de Blasio have boasted it to be.
Michael Comandini is a Licensed Associate Real Estate Broker with the Comandini Team at Keller Williams. He resides in New York’s Lower East side with his French bulldog, Churro. He can be reached at email@example.com or through ComandiniTeam.com