The Amazon Effect: Long Island City Real Estate Brokers See 15 Times Average Vol
Courtesy of Zero Hedge
As predicted would happen, sales of condominiums in Long Island City have been off the charts ever since Amazon.com announced it would make it one of its new East Coast headquarters. According to the Wall Street Journal, one local brokerage reported that it sold about 15 times its usual volume, or 150 units, over just a four day span.
While real estate speculators had already been setting up shop in Long Island City - as we noted in one of our past articles – Amazon employees have also started to pour in. Three of them who recently bought homes in Long Island City were profiled, with two of them signing contracts at a new 11 story condo building called Galerie, which sports a pool and interior courtyard.
These employees decided to buy just before the first press reports came to light that Amazon was going to choose Long Island City for its headquarters. One employee is moving from New Jersey and the other is moving from Queens. The Journal raises an interesting point: employees aren't permitted to buy and sell stock based on non-public information, but real estate could be a different story.
Amazon made the official announcement on November 13. Brokers say they are now being inundated with calls by people coming out of Amazon's Seattle office that are anticipating a transfer. The workers have reportedly expressed interest in studios and one bedroom units, all of which are generally priced below $1 million. Some are also looking at less expensive neighborhoods like Astoria and Greenpoint in Queens and Brooklyn, respectively.
Last Friday, one Amazon employee who is based in Seattle made a deal to buy a one bedroom condo at the Craftsmen Townhomes, which is a low rise development in the neighborhood. The one bedroom units at this building are listed for between $800,000 to $1.2 million. There are no reliable figures on how many total units have gone under contract in Long Island City over the last few days, but brokers in the area are describing an "unprecedented surge of buyer activity" that far surpassed speculators the week prior.
Eric Benaim, president and founder of brokerage Modern Spaces, stated that on Thursday evening through Sunday, his agents had recorded 147 deals in total.
At a real estate project known as the Corte, units have increased about $20,000 per apartment since the Amazon plan has been disclosed, but that hasn’t stopped 15 of them from going under contract. The units will get another $20,000 price bump this week.
This surge in Long Island City belies a New York condo market slump which had many sellers making deals below the asking price prior to Amazon moving in. Now, developers are all "holding the line" on asking prices and also planning increases.
People who have been looking for months have now decided they all want to buy at the same time, according to brokers. If all the deals mentioned by brokers wind up closing, it could account for as much as half of the current inventory on the market. Not only that, but new developers are still planning projects for the area. The 778 foot tall Skyline Tower, which is set to be the tallest building in Queens, is planning on opening its sales office in January instead of in the spring in order to meet demand. The Tower is going to be directly across the street from where Amazon will be taking office space temporarily until the new headquarters opens.
Finally, what would a real estate boom be without the Chinese?
After news of the Amazon move made its way through WeChat, a chat platform popular among Chinese speakers, several vans of Chinese speaking buyers toured open houses for condos over the weekend, according to brokers. On WeChat, the rising home prices on condo developments near the East River were highlighted. Some posts on the platform even included references to the local studio that produces "Sex in the City", which is apparently a popular show in China.
“A company of this heft will bring earth-shaking changes to the city it has chosen,” one of the WeChat advertisements boasted.