Even half of Amazon’s HQ2 is a huge deal for DC area, New York

This article originally appeared on November 6, 2018 by Washington Examiner.

https://www.washingtonexaminer.com/business/even-half-of-amazons-hq2-is-a-huge-deal-for-d-c-area-new-york

Think of it as splitting a winning lottery ticket. If Amazon sticks to its reported plan to divide a second headquarters between the Washington, D.C., metropolitan area and New York City, each region will get about half of what it expected from courting the e-commerce behemoth.

For better and for worse. Their respective labor and real estate markets would reap the benefits of 25,000 new jobs, rather than 50,000, but their workplace commute won’t deteriorate as much as they could have.

Ultimately, Amazon putting half of the proposed facility in Long Island City, in the New York borough of Queens, and half in Crystal City, in the southeast corner of Virginia’s Arlington County, “is probably going to be better for each one,” said Eric Schiffer of the Orange County, Calif.-based private equity firm Patriarch, who has followed the company’s plans.

“Amazon became King Solomon, and with that, no one seems happy in splitting the baby, except perhaps these two cities, in particular,” he added.

The move reported by the New York Times on Monday would bring “some pain” to each community along with its benefits, Schiffer told the Washington Examiner. “You’ve already got problems that plague New York, with high housing, population challenges, and gridlock, and you’re now going to add more tech-related positions that will exacerbate it.”

Indeed, ridership on the city’s deteriorating subway system has surged over the past five years, reaching a yearly total of 1.7 billion in 2017, and studio apartments no larger than 450 square feet routinely rent for $2,000 a month or more.

The D.C. area, meanwhile, is notorious for its traffic jams, with major arteries routinely gridlocked during morning and afternoon rush hours. Amazon may avoid the worst of that by locating in Crystal City, which has a surplus of office space after defense-industry users relocated over the past decade, Thomas Roland, managing director of consultant Morgan Franklin, told the Examiner.

The neighborhood is in walking distance, effectively, of the Ronald Reagan Washington National Airport and only a short trip via subway to Washington itself.

Not only has Amazon founder Jeff Bezos made significant investments in the area, including buying the Washington Post newspaper from the Graham family, northern Virginia “has done a particularly good job of being business friendly” in comparison with the District and Montgomery County, Md., which both made Amazon’s short list of potential sites, Roland said.

“A number of the major corporate headquarters relocations to the D.C. metro area have been occurring in McLean, Fairfax, and Arlington,” he noted.

In New York, some of the 12,000 apartments added in Long Island City since 2010 might be absorbed by Amazon’s workforce, said Janine Yorio, CEO of New York-based Compound Asset Management, which creates real estate investment funds.

Amazon’s arrival also might signal an end to a recent dip in the city’s housing market, which is known for shorter troughs than other areas, she said.

Younger workers are most likely to choose areas such as Long Island City itself, a flourishing region on the edge of the East River and close to midtown Manhattan, as well as neighborhoods like Dutch Kills and the Brooklyn community of Williamsburg, which is temporarily losing its subway to Manhattan to repairs. Executives might opt for nearby suburbs such as Westchester County and Fairfield, Conn.

While the city has a glut of condominiums, the rental market has remained strong, with occupancy rates of 98 percent, she said. “What’s likely to happen is further upward price pressure.”

Amazon already has more more employees in the two locations than any other outside Seattle, the Times said. A company representative declined to comment, as did a spokeswoman for Arlington County.

The company said earlier that it expected to invest as much as $5 billion in a single second-headquarters site and predicted its construction and operation would bring thousands of additional jobs and tens of billions of dollars in related investment.

2018-11-08T20:14:32+00:00November 7th, 2018|Media Coverage, News|