Long Island City's Shift From Industrial Complex to Residential Paradise
In 2018, Long Island City was the expected site for Amazon’s newest 4-million-square-foot office campus that was supposed to add 25,000 new jobs. Only a couple of months later, though, the company settled on a different location and withdrew its plans to build in Long Island City. Immediately following Amazon’s departure from Queens, the outlook was not clear. Nonetheless, according to local experts, the area has boomed in spite of Amazon’s decision in the four years that have followed.
Expert opinions on the impact of Amazon’s retreat are mixed. CEO of MNS, Andrew Barrocas predicts that Amazon’s job creation in Queens would have accelerated the growth of the neighborhood by five years. Contrarily, Mitch Arkin from Cushman & Wakefield and Thomas Donovan from B6 Real Estate Advisors are both bullish on Long Island City regardless of Amazon; Arkin said, “Even throughout COVID-19, Long Island City performed and now is fully recovered. Thousands of units are being built, vacancy is down, and absorption is high for both residential and retail space. Office is recovering but healthy in the neighborhood.”
Plans from 2001 to rezone Long Island City have long fueled commercial growth in the region. As a result of those plans, plenty of high-end residencies have sprung up in the area that was once entirely industrial with lots of vacant warehouses.
According to Thomas Donovan from B6, roughly 80% of the industrial stock in Long Island City is gone. Available industrial space has either been leased already or replaced with residential zoning. Yardi Matrix data estimates that over 15,000 residential units have been added into the neighborhood over the last 20 years. 3,500 of those came up in just the three years between 2019 and 2022. Additionally, 4,400 units were under construction as of this April (2022), with 23,600 being planned for future development. Mitch Arkin reported that office demand simply isn’t as high as residential demand in Long Island City anymore.
What Does The Future Hold For Long Island City Commercial Developers?
Despite increasing residential zones, office space is still being added to the Long Island City market. Between 2002 and 2022, 8.3 million square feet of office space was added, 2.7 million of which was installed between February 2019 and April 2022.
Speaking on new opportunities in Long Island City, Arkin said: “In 2011, when Jamestown decided to try to adaptively reuse the Falchi Building from light industrial/warehouse to office use, that sparked a march to industrial building renovation on the other side of the Sunnyside Yards that added millions of square feet to the market and even sparked some owners to consider building new product in formerly untested neighborhoods, such as Gantry Point.”
Gantry Point is a 237,718 square foot redevelopment and expansion of an 87,000 square foot warehouse into a high-end office building by Columbia Property Trust.
JACX was the largest development in Long Island City in recent years, bringing a 1.2mm square foot office building developed by Tishman Speyer and MdeAS Architects to Long Island City. Tenants of that building include Macy’s, Bloomingdale’s, WeWork, and NewYork-Presbyterian.
In an interview, Donovan also noted that a Trader Joe’s has popped up in Long Island City, which could be a symbol of the growth and development the area has undergone over the past thirty years, from completely industrial to high-end residential.
Long Island City’s premier residential projects include 5 Pointz, a 1,122 unit high-rise apartment building at 22-44 Jackson Ave. The building replaced a historical Hunters Point factory that was famous for its graffiti-covered exterior. Another notable development is the Skyline Tower, which is now the tallest building in Queens.
The growth of luxury residential buildings in Long Island City has brought a lot of new families to the area. Arkin noted the need for more schools, public plazas, outdoor space, and retail storefronts to support these new residents. Long Island City also suffers from a lack of parking as a whole. According to Donovan, developments must be made with long-term tenants in mind, “Many business owners, real estate owners, and locals have been there for decades. We need to listen to them and hear what they need. We need to keep the streets safe, improve transportation options and keep small businesses in business.”
What Will Happen Next?
Long Island City is rapidly becoming a blossoming city within a larger city, New York City. Massive companies such as Centene Corp have moved in where Amazon once planned on developing. Arkin expects businesses to jump from Midtown Manhattan to Long Island City once Midtown reaches price levels that businesses deem unaffordable. Cushman & Wakefield alerts prospective commercial buyers that Long Island City is a great investment, but the hold time will be longer than 5 to 7 years until exit. Large companies are validating the demand right now, and even in spite of the pandemic, the area has developed a strong culture, but the market in NYC needs to reach new highs before there will be a seller’s market in Long Island City.