Following opposition by many state and local politicians, Amazon has decided not to move forward with their plans to build a second headquarters (dubbed HQ2) in the Long Island City neighborhood of New York City. Predictably, investors who bet big on property in this area are fretting, while others who worried about sky-rocketing prices are relieved.
Here’s how Amazon’s decision is most likely to affect real estate prices in this area:
Whiplash but no lasting effect
According to a blog post on Street Easy, a New York Real Estate website, prices in the Long Island area spiked an estimated 20% following news of Amazon’s initial plan to build HQ2 in this area. Now, prices are expected to revert back to their pre-announcement levels, a move that will likely spell losses for those who bet heavily on Amazon’s plans coming to fruition. No further decline is expected, although predictably buyers are attempting to back out of the deals initially signed in the wake of Amazon’s expansion.
Who really suffers?
Amazon was poised to add somewhere in the neighborhood of 25,000 jobs to the tech market. Now that the expansion has been canceled, those opportunities will be lost to the market. An article on Inc.com suggests this could have the most impact on college graduate millennials hoping to break into the industry. Already saddled with large debt, they’ll now have a smaller pool to jump into, as the new HQ could have been a real boon to the industry.
No long-term negative impact on commercial real estate
While National Real Estate Investor notes the retail market will no longer see the obvious gains they would have if there had been an influx of professionals working in the area, it doesn’t exactly spell doom for the city’s commercial real estate sector. New York City is still one of the biggest media, tech and financial hubs in the world, and will continue to attract significant expansion in the years to come. It’s worth noting that while Amazon may not be continuing with the HQ2 project, they still have a significant presence in the city, already employing somewhere in the neighborhood of 5000 employees, with plans to expand those teams.
A silver lining?
While many are no doubt disappointed by Amazon’s decision, Fox Business maintains that there may be a silver lining. With many focusing on the Long Area to get in on the predicted Amazon boom, the attention will now return to owners and sellers on the west side of the city, potentially benefitting the market in that area. Basically, the idea is that New York was healthy before Amazon had come along and will continue to be healthy even if HQ2 has been abandoned.