Amazon’s about-face will hit Greenpoint developers, but it’s not a knockout punch

February 15, 2019 By Lore Croghan Brooklyn Daily Eagle

Greenpoint landlords may miss out on future profits due to Amazon’s pullout from Long Island City, but it won’t be the end of the world. Eagle photos by Lore Croghan

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Greenpoint landlords may miss out on long-term profits because Amazon’s not coming to Long Island City — but it won’t be the end of the world.

“For Greenpoint, Amazon was the cherry on top,” Mike Salvatico, an associate broker at Marcus and Millichap, told the Brooklyn Eagle.

The behemoth company had planned to use nearly $3 billion in city and state subsidies to build a headquarters in Long Island City and hire 25,000 employees.

Over a five-year period, Amazon’s presence would have sparked a 20 percent increase in Greenpoint apartment rents, Salvatico estimated. Revenues and property values would have risen.

“It would have been nice money but not killer profits,” he said.

“Greenpoint was a sustainable market well before Amazon came along,” Salvatico said. “And it’s going to be just fine going forward.”

‘Amazon hype’

In contrast, across Newtown Creek in Long Island City, “they have a serious issue,” Salvatico said.
“Those landlords thought they had 25,000 apartments filled with Amazon employees.”

Now that Amazon’s not coming to Long Island City, lenders for residential development there will likely start asking once again who is going to rent all the new apartments that are being built, developer Tien Vominh of Ascent Development told the Wall Street Journal.

In Greenpoint, Amazon was a big selling point for Salvatico in his job as a broker of small and mid-sized development sites.

He’d tell potential buyers that Amazon employees would want condos in Greenpoint because it’s a more appealing place to live than Long Island City.

Since the news about Amazon broke, some potential buyers have contacted him. They’re a little hesitant to sign sale contracts.

“In their own minds, they are wondering how much of the property price was based on ‘Amazon hype,’” Salvatico said.

At One Blue Slip, seen at left, leasing has been going well — but not because of Amazon, the developer’s spokesperson says.

No short-term ‘frenzy’

In the immediate term, ‘Amazon hype’ didn’t do much for the Greenpoint-Williamsburg rental apartment market, real estate appraiser Jonathan Miller told the Eagle.

“When the Amazon announcement was made last November, there was massive hyperbole about people buying and renting sight unseen, texting condo orders or ordering them on Instagram as if there was a frenzy,” the Miller Samuel CEO said.

“That simply didn’t happen — perhaps on the margin, but not market-wide,” Miller said.

His data shows that in January 2019, 51.9 percent of apartment landlords in the two neighborhoods had to offer concessions like free months of rent to get tenants to take their apartments — a significantly higher number than the 42.6 percent that were doing so in January 2018.

From the esplanade at Greenpoint Landing, you can see Long Island City, where Amazon has decided not to move.

Fast leasing pace at One Blue Slip

Things are going well at the neighborhood’s largest residential project, Greenpoint Landing — but Amazon had nothing to do with it, a spokesperson for co-developer Brookfield Properties told the Eagle.

Leasing has been ongoing since last summer at the project’s first market-rate rental apartment tower, One Blue Slip.

“We built and opened One Blue Slip without any notion of Amazon’s presence,” the spokesperson said.
“And the apartments are leasing faster than we projected by people without any connection to Amazon.”

The 30-story, 359-unit apartment tower is located right on Newtown Creek’s shoreline. If Amazon employees had lived at One Blue Slip, they could have walked or biked over the Pulaski Bridge to work.

Asking rents for available units at One Blue Slip currently range from $2,908 per month for a studio to $5,552 per month for a two-bedroom apartment, the property’s website says.

A spokesperson for Mack Real Estate Group, a co-developer for the neighborhood’s other big apartment development, the Greenpoint, declined to comment about Amazon.