Amazon Is Off The Menu. How Will New York Real Estate React?

Seemingly out of nowhere, retail giants Amazon reneged on their plan to base their new headquarters in Long Island. Among other effects, this decision will take with it up to 25,000 workers, according to CNBC. With many investors already having flocked to the state property market and some Amazon employees purchasing ahead of time, what will the property market look like after the dust has settled?

Increased numbers of rentals

New York’s property market has boomed for a number of years, but as Bloomberg assessed in December, a slump has finally arrived. Total state sales dropped in all areas but Westchester. The Amazon influx will have seen a sharp rise in this, but those properties now will remain vacant. This points most directly to a rise in properties on the rental market, especially where senior investors are concerned, given their ability to obtain equity release through reverse mortgages. New York has form for this; official statistics show over 2,000 such transactions through 2018.

Sinking house prices

As Bloomberg outlined, house prices have stayed high for a number of years. They have remained high despite agents dealing with increased tax rates and higher business rates. However, indications are that this trend is reversing, and with the Amazon pull out, this will only become accelerated. There is some evidence of this already. According to the New York Times’ weekly real estate column, early February saw a large Bedford home sell for $740,000, and a huge Easton home went for $745,000.

Andrew Gordon states how he just closed on my listing 2 days ago. My sellers got the benefit of the Amazon announcement but now many will face angry buyers who want to get out of their contracts. My clients got about 10% over value.

The long term impact

The impact of Amazon is likely to be less pronounced than many have predicted, according to outlets including Curbed. However, there is a chance that the long term effects will weigh heavily on the real estate market. One huge area which will feel the Amazon impact is the tech industry, which Inc reports were buoyed by Amazons interest. The tech industry is particularly fast growing, and salaries are very competitive. Put simply, less money in Long Island could lead to a shrinking real estate market – with time, it may well become a buyer’s market once again.

Speaking as someone who was born and raised in Queens and who loves her native borough, Jessica Meis of Compass believes issues being brought up by those who outright oppose the Amazon deal have plagued Queens for decades.  The city and the state have had minimal positive effects on the infrastructure issues of the Borough making the backlash of the Amazon deal by local politicians even more ironic in my opinion. I do whole-heartedly believe that there are more people in favor of the Amazon deal in Queens than opposed, however, it is not easy to speak up against your local politician, especially as he is a well-respected one at that.

Amazon is a huge company, and its withdrawal from New York was guaranteed to cause ripples. Such was the apparent finality of their HQ2 placement in Long Island, many investors and prospective employees have been burned when it comes to property. In the short term, those looking for a new home will benefit; in the long term, perhaps even more.

Have a listing you think should be featured contact us or email at Jeremy@offthemrkt.com to tell us more! Follow Off The MRKT on Twitter and Instagram, and like us on Facebook.