Commercial property

Inside Long Island City’s Real Estate Scene, After Amazon

Photo by Brian Lundquist on Unsplash

End of 2018, Amazon put Long Island City in the spotlight with its plan to build a 4 million square foot campus in the Queens borough and create 25,000 new jobs. Despite the company’s decision to pull out a few months later, which tested the future of the neighborhood, the area continued to thrive, according to local experts.

Andrew Barrocas, CEO of the brokerage firm MNS, estimates that Amazon would have accelerated the neighborhood’s growth by five years. On the other hand, Cushman and Wakefield Executive Director Mitch Arkin and Thomas Donovan, Partner and Vice Chairman of B6 Real Estate Advisorsthink Long Island City has always been on the growth bandwagon, with or without the e-commerce giant.

“Even throughout COVID-19, Long Island City has played and is now fully recovered,” Arkin said. “Thousands of units are being built, vacancy is down and absorption is high for residential and commercial space. The office is recovering but healthy in the neighborhood.

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Long before Amazon announced its flagship plans, a major catalyst for Long Island City’s growth was the rezoning of the core of Long Island City, approved in 2001. Through this legislation, the area plan once industry has radically changed, with high-end residences. buildings replacing vacant warehouses.

“Business owners had to look elsewhere for space,” Donovan said. “When my team and I bring warehouses to market, there’s usually a fight because that kind of space is so hard to come by now. About 80% of the industrial stock has disappeared.

According to Yardi Matrix data, more than 15,000 residential units have come online in the neighborhood over the past two decades, with 3,500 units delivered between 2019 and 2022. An additional 4,400 units were under construction as of April 2022, with more than 23,600 units planned. and prospective steps.

The original rezoning reshaped the entire Court Square and Queens Plaza North areas, and some believe too many residences have been added with insufficient office inventory, Arkin noted, adding that office demand is not as high as the residential demand in the neighborhood.

Projecting the future and growing pains

the city of long island jacx
The JACX. Image courtesy of Jesse David Harris

Weak demand for office space hasn’t stopped developers from adding more than 8.3 million square feet of space to the market between 2002 and 2022, of which 2.7 million square feet were completed after February. 2019.

“In 2011, when Jamestown decided to try and adaptively reuse the Falchi Building from light industrial/warehouse to office use, it sparked a march towards renovating industrial buildings across the Sunnyside yards that added millions of square feet to the market and even prompted some homeowners to consider building new products in previously untested neighborhoods, such as Gantry Point,” Arkin said.

Completed in April 2021, Columbia Real Estate Trust 237,718 square foot Gantry Point is the redevelopment and expansion of an 87,000 square foot warehouse into a high-end office building.

The largest office project to come online in recent years was The JACX, a 1.2 million square foot development by Tishman Speyer in May 2020. Designed by MdeAS Architects, the 68-story creative office development features landscaped grounds with over 100 trees and is fully leased by major tenants including Macy’s, Bloomingdale’s, WeWork and NewYork-Presbyterian.

“On the retail side, you can walk down Vernon Boulevard or Jackson Avenue to see what kinds of businesses are around. Last year a Trader Joe’s opened, and I think that kind of store is a testament to how the area has grown and changed over the last thirty years,” Donovan said.

Among the residential projects most representative of Long Island City’s growth is 5 Pointz, a 1,122-unit rental tower that opened last summer. Located at 22-44 Jackson Ave. in the Hunters Point neighborhood, the property sits on the site of a former factory that became famous for its graffiti-covered exterior. The building was eventually demolished in 2014 by developer Jerry Wolkoff.

Another example includes the 802-unit Skyline Tower, the tallest building in Queens. The $700 million condo community features high-end amenities and a dedicated entrance to the Court Square-23rd Street train station.

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long island city gantry point
Portico point. Courtesy of Columbia Property Trust

On the other side of the coin, Long Island City’s growth has come with its own set of challenges. Arkin stressed the need for more schools, especially with so many new residential buildings and families coming to live in the area. He also mentioned the need for more public plazas to add outdoor space to the central business district and more support for retail as office workers return to the office full-time.

Meanwhile, Abramov thinks that even with Trader Joe’s and Target having signed leases, there’s a lack of other big box stores and a constraint due to lack of parking.

“I think it’s important to allow Long Island City to grow while keeping the essence of the neighborhood alive,” Donovan said. “Many business owners, real estate owners and locals have been there for decades. We must listen to them and hear what they need. We need to keep streets safe, improve transportation options, and keep small businesses going. »

Trends and forecasts

With a growing development pipeline and a flurry of leasing activity, such as healthcare company Centene Corp.’s 500,000 square foot lease. in the building Amazon intended to occupy, Long Island City shapes itself as a city within a city.

Arkin believes Long Island City’s office market is very dependent on Midtown Manhattan, much like Downtown Manhattan. Once prices in Midtown reach levels that businesses deem unaffordable, he thinks they will migrate to Long Island City, which will lead to more business moves.

“We tell potential buyers that Long Island City is a great area to invest in, but the holding time needs to be a longer horizon than just a 5-7 year exit,” Arkin said. “There will be a demand there for quality office space, which has been proven with companies like Macy’s, JetBlue, Estee Lauder, Altice and Centene. The area has developed into a fun work and play environment and will continue to do so despite the setbacks caused by the pandemic.