The Real Deal New York

LIC could be a prime target for rezoning: panel

Innovo's Andrew Chung, City Planning's Marisa Lago weigh in on area's potential as e-commerce hub
By Eddie Small | June 19, 2018 03:15PM

Left to Right: Jeremy Sprague, Andrew Chung, Steven Derwoed, Christopher Shehadeh, Marisa Lago, and Alan Suna

E-commerce companies looking for warehouses for last-mile deliveries should look no farther than Long Island City, according to a panel on the neighborhood.

“Amazon Prime went from next-day delivery to same-day delivery, and now they want two-hour delivery,” said Andrew Chung, founder of Innovo Property Group. “In order to do two-hour delivery, you can’t service from New Jersey anymore. Long Island City is actually the most ideal place.”

Chung sat on one of the final panels of the day at the Long Island City Partnership’s fifth annual LIC Summit at the Museum of the Moving Image. The panel discussed the new types of commercial and residential developments that are transforming the neighborhood, and Department of City Planning director Marisa Lago indicated that this could eventually necessitate a rezoning.

“We are looking at the zoning in our manufacturing areas — our manufacturing M-zones — most of which was put in place in the 1960s, and the world has changed a little since then,” she said. “And figuring out, should we allow a density, a floor area ratio, of more than 1 or 2?”

Lago and Chung sat on a panel with Macy’s senior vice president Steven Derwoed, Boyce Technologies purchasing manager Jeremy Sprague and Tishman Speyer senior managing director Christopher Shehadeh. Silvercup Studios co-owner Alan Suna moderated the discussion.

Shehadeh said Tishman Speyer had been in Long Island City since 2000 and were strong believers in the neighborhood, particularly given its status as a transit hub. The company is currently at work on a 1.1 million-square-foot office-and-retail project at 28-10 Queens Plaza South, but Shehadeh said it remains difficult to make the economics of office space in the neighborhood work.

“The commercial side of the business has been challenging,” he said. “From a ground-up perspective, you need higher rents to afford the construction costs. Most of the office leasing that’s been done in Long Island City has trended towards manufacturing buildings that have been converted. They have a lower cost basis. They can afford to charge lower rents.”

Chung’s company made their first major purchase in Long Island City in 2016, when they bought 24-02 49th Avenue for $195 million. The New York City Housing Authority occupied most of the property, and although its lease was set to expire in 2020, Innovo has renewed it for at least two decades, Chung said. They will be on the first four floors, while the fifth and sixth floors are still up for grabs.

Although Chung said his company is open to virtually any type of businesses going on the top two floors, he was particularly excited about the prospect of landing a tenant in the life sciences industry. He said the space was well suited for it and that it could help spark a wave of life-sciences companies coming to New York that he feels is long overdue.

“It’s a burgeoning industry. New York needs to be a part of it,” he said. “It’s amazing to me that it hasn’t been.”