AMAZON FALLOUT: REAL ESTATE VALUE

The fallout from Amazon’s cancellation of its HQ2 deal in Queens continues to raise many questions. What’s happened to real estate values and what’s the potential loss to homeowners? We have a must-see market analysis.

Aired on February 20, 2019. 

TRANSCRIPT

> DEAD DEALS, DEAD MARKET.

AS AMAZON PULLS OUT OF THE PLANS TO BUILD THE HEADQUARTERS IN LONG ISLAND CITY, NEW YORK'S REAL ESTATE MARKET GRAPPLES WITH THE AFTERMARKET WITH THE PROSPECT OF 25,000 NEW JOBS GONE.

THOSE WHO EAGERLY BOUGHT APARTMENTS BASED ON THE TECH GIANT'S ARRIVAL NOW WENT OUT.

COULD IT LEAVE LONG ISLAND CITY WITH A DEAD MARKET?

WE HAVE THE FOUNDER OF THE REAL ESTATE MEDIA COMPANY, THE REAL DEAL.

AMIR, WELCOME.

THANK YOU FOR HAVING ME.

FIRST, FOR THOSE OF US WHO HAVEN'T DRIVEN THROUGH LONG ISLAND CITY, MAYBE HAVEN'T BEEN TO QUEENS RECENTLY, GIVE US A QUICK LAY OF THE LAND, WHAT ARE WE TALKING ABOUT?

IT WAS THE INDUSTRIAL PART OF QUEENS.

IT'S ON THE EAST RIVER.

IT'S HOME THE QUEENS BRIDGE WHICH IS THE LARGEST PUBLIC HOUSING PROJECTS IN THE WESTERN HEMISPHERE.

IT HAS A GDP $10,000 BELOW THE POVERTY RATE COMPARED TO THE REST OF THE COUNTRY.

SO THOSE PEOPLE ARE ESPECIALLY GOING TO BE AFFECTED BY THIS.

IT'S VERY DEVASTATING FOR THEM.

THERE WAS SUPPOSED TO BE 1,500 OF THE JOBS GOING TO THAT COMMUNITY ALONE AND NOW THOSE JOBS ARE NO LONGER AVAILABLE TO THEM.

IT'S VERY DEVASTATING FOR THE REAL ESTATE AND THE COMMUNITY AND SEE THAT THE EFFECTS ARE IN THE LONG TERM.

I THINK THE POLITICIANS WILL HAVE TO PAY AT THE POLLS FOR WHAT HAPPENED HERE.

YOU SORT OF GAVE US AN IDEA OF WITH THERE BEING AN INDUSTRIAL PART OF THE CITY.

I'M TRYING TO GET AN UNDERSTANDING OF HOW MUCH AFFORDABLE HOUSING, BECAUSE THAT SEEMED TO BE A REAL POINT OF CONTENTION WAS THAT PEOPLE WHO WERE LIVING IN THAT AREA WERE SAYING WE'LL GET PRICED OUT.

WE'RE BEING TO GET DISPLACED.

RIGHT.

SO I MEAN, ALL THE NEW HOUSING THAT HAS GONE THERE IS 8020 HOUSING.

ZONING CHANGE, I THINK ABOUT SIX OR SEVEN YEARS THERE AND THERE'S A BOOM OF GLASS TOWERS THAT HAVE GONE UP IN LONG ISLAND CITY AND THOSE TOWERS WERE NOT COMPETITIVE HOUSING FOR THOSE WHO LIVED IN THE AREA.

IT WAS THOSE WHO LIVED IN THE CITY WHO WANTED SOMETHING A BIT MORE AFFORDABLE.

SO THAT HOUSING WASN'T REALLY STOCK -- IT WASN'T FOR THE COMMUNITY NECESSARILY.

SO MORE LIKE LUXURY CONDOS?

IT WAS LUXURY CONDOS.

IT WAS NOT COMPETITIVE FOR THAT NEIGHBORHOOD.

YOU KNOW, IT WAS -- ONE BEDROOM WAS GOING FOR SEVERAL THOUSAND DOLLARS WHICH IS, YOU KNOW, NOT WHAT YOU'D EXPECT TO GET WHEN YOU'RE IN QUEENS OR IN LONG ISLAND CITY FOR THAT MATTER.

OKAY.

BUT THAT'S REALLY CHANGED.

IF YOU DRIVE THROUGH LONG ISLAND CITY TODAY OUTSIDE OF THOSE GLASS TOWERS, MOSTLY ON THE WATERFRONT IT'S STILL A VERY INDUSTRIAL -- YOU KNOW, VERY INDUSTRIAL STILL.

A LOT OF OFFICE SPACE, STUFF LIKE THAT?

I MEAN, THERE'S A GOOD AMOUNT OF OFFICE SPACE THERE.

MORE HAS BEEN BUILT THERE.

BUT THERE'S ROUGHLY AROUND 13 MILLION SQUARE FEET OF OFFICE SPACE THERE WHICH IS LARGER THAN, YOU KNOW, OKLAHOMA CITY AND KANSAS CITY COMBINED.

WOW.

SO THEN WHEN AMAZON ANNOUNCED THEY WERE COMING AND WE WERE HEARING THAT THE PEOPLE WERE BIDDING ON THE APARTMENTS, SIGHT UNSEEN.

$300,000 OVER THE ASKING PRICE.

WHAT HAPPENS?

WELL, THERE'S A GREAT VALUE THAT COMES WITH AMAZON.

WHEN -- OR ANY COMPANY OF THAT SIZE COMES TO THE NEIGHBORHOOD, THERE'S A BOOM EFFECT.

YOU KNOW?

THAT HAPPENED WITH GOOGLE.

GOOGLE -- A LOT OF PEOPLE DON'T TALK ABOUT THIS, BUT GOOGLE IS THE SAME SIZE OF AMAZON, MAYBE SLIGHTLY SMALLER OR LARGER, BUT THEY HAVE SEVERAL MILLION SQUARE FEET RIGHT HERE IN MANHATTAN.

THEY DIDN'T HAVE TO DEAL WITH ANY OF THIS STUFF.

WHEN THEY WENT TO THE MEAT PACKING DISTRICT, MAYBE YOU COULD SAY IT WAS GOOGLE, MAYBE YOU COULD SAY IT WAS OTHER THINGS THAT HAPPENED IN THE MEAT PACKING BUT THEY HAD A TREMENDOUS IMPACT ON THAT PART OF TOWN.

AND THEN THAT WAS IN MANHATTAN.

YOU KNOW?

AND LONG ISLAND CITY/QUEENS COULD HAVE DEFINITELY USED AMAZON IN LONG ISLAND CITY.

SO NOW IT -- I MEAN, SO MANY PEOPLE LIKE IMMEDIATELY WERE JUMPING ON APARTMENTS AND CONDOS, ET CETERA, AND PLANS WERE BEING MADE.

WHAT HAPPENS TO SOME OF THOSE CONTRACTS?

THE WHOLE SCOPE OF IT WAS -- THE WHOLE RANGE WAS SO SHORT THAT THE REAL ESTATE DEALS DON'T HAPPEN THAT FAST UNLESS YOU'RE BUYING STUFF, YOU KNOW, BY CASH.

BUT, YOU KNOW, I THINK IT'S TOO SOON TO TELL IF THOSE PEOPLE WHO JUMPED IN AND WHAT HAPPENED TO THEM.

BUT YOU KNOW THE PEOPLE WHO JUMPED IN FULLY KNEW WHAT THEY WERE GETTING IN TO.

ESPECIALLY IF THEY WERE TRYING TO JUMP IN ON THE OPPORTUNITY THAT WASN'T FULLY BAKED.

SO THEN GIVEN THAT WE SEE THAT AMAZON IS NOW NO LONGER IN LONG ISLAND CITY AND THEY SAID NO TO NEW YORK OVERALL, DO WE KNOW WHAT BECOMES OF THE QUEENS MARKET NOW?

DOES IT COLLAPSE ON ITSELF?

DO WE SEE PERHAPS SOME OTHER KIND OF INVESTMENT THAT WOULD ALLOW FOR THE PEOPLE WHO ARE ALREADY LIVING THERE TO BE ABLE TO STAY OR WHAT HAPPENS?

IT WAS A REAL BOOM AND PEOPLE ESPECIALLY IN THE AREA, THE RESTAURANTS, THE BUSINESSES IN THE AREA, THEY'RE VERY HAPPY.

PEOPLE TALKED ABOUT THE 25,000 JOBS THAT AMAZON WAS GOING TO BRING TO THE AREA.

BUT THERE WAS ANOTHER 15,000 JOBS THAT WERE SUPPOSED TO COME AS A RESULT INDIRECTLY AS A RESULT OF IT.

WHICH HAVE BEEN -- WHICH WOULD HAVE BEEN GREAT FOR THE COMMUNITY THERE.

AGAIN, IT'S TOO SOON TO TELL.

I DON'T THINK IT'S GOING TO COLLAPSE ON ITSELF.

IT'S GOING TO CONTINUE TO GROW.

THERE'S 220,000 BUSINESSES IN NEW YORK CITY.

NEW YORK CITY IS STILL THE GREATEST TOWN AND TALENT POOL IN THE COUNTRY AND THE WORLD.

THE JOBS THAT AMAZON IS BRINGING TO NEW YORK, THEY'D HAVE BEEN ON AVERAGE $100,000 AND THEY WOULD HAVE HELPED IN A POSITIVE WAY.

I DON'T THINK IT'S GOING TO BE TEND OF ANYTHING FOR NEW YORK CITY.

IT'S A CHINK IN THE ARMOR BUT THAT'S ABOUT IT.

JUST TO CIRCLE BACK THOUGH TO THE ISSUE OF DISPLACEMENT BECAUSE THAT SEEMS TO BE A REAL CONCERN FOR THE RESIDENTS OF THAT AREA WAS THAT WITH THIS KIND OF AN ECONOMIC BOOM, YES, THERE WILL BE, YOU KNOW, TAXES AND REVENUES AND YES, ALL THE NEW JOBS BUT WE'RE GOING TO BE DISPLACED.

DISPLACEMENT HAPPENED WHEN THE ZONING CHANGED AN IT WAS ALREADY AN INDUSTRIAL PART OF THE QUEENS.

IT WAS -- LONG ISLAND CITY WAS ALL MANUFACTURING.

SO IT WASN'T LIKE ENTIRE NEIGHBORHOODS OR COMMUNITIES LIKE BED STUY OR FLUSHING -- NEIGHBORHOODS LIKE THAT HAD THAT HAD AN ELEMENT OF A NEIGHBORHOOD THERE.

PEOPLE WENT THERE TO WORK, THEY WENT THERE TO BUILD THINGS.

IT WASN'T LIKE -- YOU KNOW, THE COMMUNITY THAT WAS THERE WAS -- IT WASN'T WORTH LOSING -- WHATEVER THE ARGUMENTS FOR THE AFFORDABLE HOUSING IN THAT AREA WAS IT WASN'T WORTH LOSING EVERYTHING THAT AMAZON WAS GOING TO BRING TO THE CITY AND THE AREA.

THE PEOPLE MOST IMPACTED BY IT ARE QUEENS BRIDGE.

IF ANYBODY WAS SUPPOSED TO COMPLAIN ABOUT AMAZON COMING WAS THAT COMMUNITY AND THEY WANTED AMAZON IN THAT AREA.

BECAUSE AMAZON WAS GOING TO PROVIDE 1600 JOBS IN THAT COMMUNITY AND THEY'RE FURIOUS.

OF COURSE WE'LL BE LOOKING TO SEE HOW IT PLAYS OUT IN THE LONG TERM.

DO YOU THINK THAT'S ANY HUNGER IN THE MARKET AT LEAST FOR QUEENS FOR JUST AFFORDABLE HOUSING AND NOT LUXURY HOUSING?

WELL, I THINK THERE'S ALWAYS A NEED FOR AFFORDABLE HOUSING IN THIS CITY.

IT'S A SHAME THAT WE CAN'T FIGURE IT OUT.

IT'S A SHAME WE CAN'T FIGURE OUT A LOT OF THINGS IN THIS CITY BECAUSE WE'RE ONE OF THE WEALTHIEST CITIES IN THE WORLD AND WE CAN'T FIGURE OUT OUR EDUCATION OR OUR AFFORDABLE HOUSING.

BUT THOSE ARE THINGS THAT WE'RE MOVING TOWARDS AND LUCKILY THERE'S A CONSTANT HEALTHY DEBATE ON BOTH SIDES.

YOU KNOW, TRYING TO MOVE FORWARD.

THANK YOU FOR GIVING US SOME INSIGHT AND UNDERSTANDING AS TO WHAT HAPPENED ESPECIALLY WITH THE REAL ESTATE ANGLE AND WHAT WE CAN HOPEFULLY TO SEE IN LONG ISLAND CITY.

THANK YOU SO MUCH.

Funders

MetroFocus is made possible by James and Merryl Tisch, Sue and Edgar Wachenheim III, the Sylvia A. and Simon B. Poyta Programming Endowment to Fight Anti-Semitism, Bernard and Irene Schwartz, Rosalind P. Walter, Barbara Hope Zuckerberg, Jody and John Arnhold, the Cheryl and Philip Milstein Family, Janet Prindle Seidler, Judy and Josh Weston and the Dr. Robert C. and Tina Sohn Foundation.

WNET

© WNET All Rights Reserved.

825 Eighth Avenue

New York, NY 10019