AMAZON FALLOUT: REAL ESTATE VALUE

February 21, 2019 at 4:45 am

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 Print

>> 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