Last Valentine’s Day, Amazon broke a few hearts after announcing that they would no longer establish their headquarters in Long Island City. Many falsely believed this announcement would have a deleterious effect on this otherwise thriving neighborhood, just a short subway ride from Manhattan. However, to quote Mark Twain, “The reports of my death are greatly exaggerated.”
As recently reported in the New York Post, Skyline Tower, the 67-story structure rising across from One Court Square, will still be erected — without its Amazon tenants. The building, which launched sales in May, will be the tallest residential property in Queens, with 802 units from studios to four bedrooms, priced from $500,000 to $4 million.
On “The Stoler Report,” my weekly television show, which airs in New York City on CUNY TV, Eric Benaim, CEO of Modern Spaces, shared positive projections regarding Long Island City’s growth. “The residential market was strong prior to their [Amazon’s] announcement of relocation to LIC and continues to be great. There are more than 7,000 residential rental and condominium units in the pipeline over the next two to three years.”
Hub of Medical Facilities
Regarding One Court Square, Crain’s New York Business and other publications report that St. Louis-based healthcare company Centene Corporation is negotiating a deal to take up to 500,000 square feet at the property. The deal appears to be related to Centene’s acquisition last year of Queens-based healthcare company Fidelis. A source said Centene could relocate Fidelis’ operations into the tower from its current space in nearby Rego Park.
The convenient proximity to Manhattan, Cornell Tech on Roosevelt Island and numerous hospital and healthcare facilities on First Avenue, makes LIC the perfect neighborhood for healthcare and life sciences. As reported in the Real Deal late last year, Alexandria Real Estate Equities, which expanded its footprint in New York City with the purchase of Pfizer’s headquarters in Manhattan, is bringing one of its life sciences centers to LIC. The California-based real estate investment trust purchased the Bindery building at 30-02 48th Avenue.
The developer opened its Alexandria Center for Life Science biotech incubator close to the NYU Langone Medical Center and Bellevue Hospital in 2010 and plans to convert the three-story former warehouse. According to an investor presentation, the vacancy rate for lab space in New York City is less than 2.8 percent, which means Alexandria and other life sciences companies will have to find suitable locations in New York City, and especially in Long Island City.
Industrial Era Rebirth
Joseph Farkas, CEO, Metropolitan Realty Associates who an industrial buildings in Long Island City, concurs with Mr. Benaim, who as a guest on my show, expressed his belief that the loss of Amazon is not the end for LIC. The industrial market is fluent and continues to be strong. Accessibility to the rest of the city and the highways, coupled with the group of logistics and last mile delivery, makes LIC one of the strongest industrial markets in New York City.
The market for office space and the industrial and office conversion market in Long Island City continue to grow and thrive. As reported in various sources in January, Tishman Speyer brought The JACX, its creative office project in Long Island City, to full occupancy. New lease agreements with Macy’s and New York Presbyterian totaling 328,000 sq. ft. complete the tenant roster at the 1.2 million square foot property months in advance of its completion.
“Our ability to pre-lease most of The JACX prior to construction and all of the space prior to completion firmly demonstrates Long Island City’s viability as an office hub and a magnet for today’s creative workforce,” said Rob Speyer, president & CEO of Tishman Speyer, in a prepared statement.
Hotbed for Entertainment
Long Island City continues to be the leading market for movie and television production in New York City. It is the home of Silvercup Studios, the largest film and television production facility in New York City. They have 19 studios located in the neighborhood. It is also the home of Kaufman Astoria Studios, the historic movie studio located adjacent to LIC in the Astoria section. LIC is home to New York City’s only backlot, which opened in 2013.
Significant Tax Benefits
Additionally, Long Island City offers tenants and owners of property business tax incentives which include:
- Industrial & Commercial Abatement Program (ICAP)
ICAP grants property tax abatement to commercial and industrial buildings, for up to 25 years.
- Relocation & Employment Assistance Program (REAP)
REAP provides tax credits of up to $3,000 per employee per year for businesses relocating to eligible areas. Improvements to relocation premises are required.
- Commercial Expansion Program (CEP)
CEP provides rent abatements of up to $2.50 per square foot on new, renewal, and expansion leases in eligible areas. The program has a term of up to five years for commercial businesses and ten years for industrial businesses. Improvements to premises are required.
- Energy Cost Savings Program (ECSP)
ECSP reduces the delivery component of utility bills for up to 45 percent for electricity and 35 percent for natural gas. Businesses must (1) relocate to; (2) make improvements to property in; or (3) lease space in previously improved buildings in qualified areas.
- Industrial Business Zone (IBZ) Relocation Credit
IBZ Credit provides industrial businesses relocating to designated IBZ areas with tax credit of $1,000 per employee up to $100,000 in total.
- Commercial and Industrial Energy Efficiency Program Con Edison
Con Edison offers an array of options to businesses such as financial incentives to upgrade to energy efficient equipment to help lower utility bills. Customers can also get paid to temporarily reduce their energy usage in the summer with their smart usage rewards program.
- NYC Industrial Development Agency NYCEDC
NYCEDC grants discretionary benefits to induce developers and businesses to undertake major capital investments that result in the creation of quality jobs within NYC. Benefits may include reduction in real estate tax, deferral of mortgage recording tax, and exemption from sales tax.
Despite the recent loss of an e-commerce mogul, New York City and Long Island City are constructed from breathable, organic fibers that adapt to new circumstances, allowing these great areas to thrive and grow in the 21st century.
Contact your Friedman tax advisor with tax questions pertaining to your New York and Long Island City property.