The Real Deal New York

This dev site next to Amazon’s LIC campus could be home to an 800K sf project

Plaxall is holding onto the land, located between 46th Road and 46th Avenue
By Rich Bockmann and Kathryn Brenzel | November 14, 2018 11:45AM

Jeff Bezos and a monopoly version of the Long Island City site (Credit: Getty Images and iStock)

Plaxall isn’t completely handing over its large Long Island City project to Amazon.

The family-run plastics company, which last year developed a 15-acre plan that appears to have been the key to luring Amazon’s HQ2 to New York, will retain a site just to the south of the tech company’s planned campus where it can develop its own commercial building, according to a memorandum of understanding between the company and the state and city’s respective economic development arms.

“The Plaxall sites to the south, they are going to be almost exclusively commercial,” James Patchett, head of the New York City Economic Development Corporation, said during a press conference Tuesday announcing Amazon’s selection of Long Island City as the home of its new headquarters. “There’s some residential that we’re still contemplating as part of the general project plan for the southernmost section of those sites, but in the aggregate, it’s a commercial plan now focused on that. I’m not saying there won’t be any residential units as a part of it, but we’ll be having conversations with the community.”

Plaxall last year announced a plan to rezone an area around the Anable Basin, covering some 14.7 acres, 12.6 of which are owned by the company. According to an MOU between Amazon and the Empire State Development Corp., Amazon plans to redevelop the northern portion of that site for its HQ2 headquarters, which will initially span 4 million square feet and could grow to as much as 8 million square feet.

Plaxall, however, will retain the southernmost block of the larger project: a group of properties that sit on the block between 46th Road and 46th Avenue. The six property lots, which cover nearly the entire block, would allow Plaxall to build a mixed-use building slightly larger than 800,000 square feet, or a residential building of nearly 566,000 square feet.

Under the residential plan, the new building would be subject to the city’s Mandatory Inclusionary Housing requirements, and under either scenario, Plaxall would set aside 5 percent of the space for light industrial use.

A spokesperson for Plaxall declined to comment on its development plans, but earlier Tuesday company directors put out a statement saying they had developed a vision for Anable Basin “centered around that spirit of productivity and quality of life – one that maintains light manufacturing while also creating public accessibility to a long-shuttered waterfront.”

They referred to Amazon as a “partner,” though it’s not clear how they’ve structured their transaction with Amazon, whether it be a sale, leasehold interest or some kind of joint venture.

Both southern and northern portions of the development project appear as though they’ll be rezoned through what’s known as a general project plan, which allows the state to go around the city’s arduous land-use review process.

Though Amazon has yet to name development partners for the sites it’s taking over from Plaxall, TF Cornerstone will develop the other portion of the company’s new headquarters. The developer was tapped earlier this year to redevelop city-owned sites, creating a mixed-use project known as “Long Island City Innovation Center.” Those city-owned sites will instead be part of Amazon’s new headquarters and will include manufacturing and industrial space. Initial plans for the innovation center project included affordable housing but that appears to no longer be the case.

Amazon’s move to Long Island City is likely to create additional jobs outside the company, which would lead to more demand for office space.

The Cuomo administration touted an economic study it commissioned by the policy-analysis firm REMI Inc., which showed that by 2034 Amazon could add 40,000 new jobs, and that would spur 67,000 additional induced jobs.

“One class of jobs is going to be the impact on supply chain: both the supply chain related to the headquarters itself as well as the induced employment from the increase in jobs,” Peter Evangelakis, a senior economist at REMI and the principal investigator on the report, told The Real Deal.

Evangelakis noted that all those jobs would not necessarily be in New York City. But considering the demand for office space that Amazon’s hiring has spurred, it’s likely that the induced job growth would mean more companies leasing space in the Big Apple.

All signs point to Long Island City going the way of Midtown South, said Jeffrey Peck, vice chairman at Savills Studley. Once a neighborhood for tenants who couldn’t afford Midtown, the submarket was transformed by an infiltration of tech companies, which were then followed by startups, he said. He said Long Island City has largely been unsuccessful in luring major office tenants. The neighborhood had an availability rate of 26 percent in the third quarter, according to Newmark Knight Frank.

“I have to believe that this will be a 180-turn,” he said, referring to Amazon’s arrival.

Tishman Speyer’s Rob Speyer disagreed, saying the neighborhood has been changing for some time. He noted that his company first invested in Long Island City in 2003. In the lead-up to Tuesday’sannouncement, Tishman’s 1.1-million-square-foot office project at 28-07 Jackson Avenue and 28-10 Queens Plaza South — known as the JACX — was floated as a possible location for Amazon’s new headquarters. However, Savanna announced on Tuesday that Amazon had instead agreed to lease one million square feet at its One Court Square. Speyer said the JACX was 75 percent pre-leased.

“Macy’s was the real pioneer in Long Island City,” Speyer said, referring to the retailer’s 550,000-square-foot lease at the tower. “I’m sure Amazon will lead to even greater demand, but the activity level has been high for us.”