Hope springs eternal.
Nothing happens in a vacuum.
A day after Amazon said it would not build a headquarters in New York City after all, those two ancient lessons are holding true.
Chicago Dreaming
Chicago provides an example of how optimism endures in payment and commerce even if all the odds are set against you. Soon after news broke on Thursday (Feb. 15) that Amazon officially called off its Long Island City HQ2 project in Queens, the city known unofficially as the capital of the Midwest put in another plug for itself as the rightful place for that facility. Both the new governor of Illinois and the outgoing mayor of Chicago signed a letter urging Amazon to “take another look at Chicago.”
Chicago made it to the final round in the Amazon HQ beauty pageant. Even though winter continues to do a brutal job on the city by the lake, the hope that Amazon could reconsider — some might call it desperation or political theater, though there is no denying that most of Chicago’s political and business elite really, really want Amazon — seems almost spring-like.
Chicago wasn’t the only city trying to cozy back up to Amazon over the last 24 hours. Warren, Michigan — a town of about 134,000 located in the greater Detroit area — would make a great home for Amazon, according to what the mayor of Warren put on his Facebook page on Thursday. “We already have the world headquarters of Cadillac leaving New York City for Warren. So, why not another world headquarters move to Warren?” wrote Mayor Jim Fouts.
As well, Newark put itself back in the running, so to speak, with the New Jersey governor urging Amazon to take another look at that city.
All those hopes are likely to be crushed like a flower under a heavy winter boot.
That is, according to comments from Amazon after it killed its New York HQ project. In a blog posting about its decision to cancel plans for the New York facility, Amazon said, “We do not intend to reopen the HQ2 search at this time. We will proceed as planned in Northern Virginia and Nashville, and we will continue to hire and grow across our 17 corporate offices and tech hubs in the U.S. and Canada.”
Real Estate Pain
While many officials in New York City and the state are no doubt still sore about the loss of this massive Amazon project, others are probably in even worse condition. Those are the people who gambled, and apparently lost, on the seemingly sure bet that real estate would appreciate significantly with Amazon in Queens.
The Wall Street Journal on Friday (Feb. 15) said that Amazon’s decision “stunned real-estate speculators, developers and renters who had rushed into the Long Island City neighborhood to be near the new HQ2.” That sense of shock applies to residential and commerce real estate alike. “The real-estate investment firm Savanna had a commitment from Amazon to lease the majority of a 1.4 million-square-foot office tower in Long Island City,” the paper said. “Now with the building’s main tenant, Citigroup Inc., likely to leave in 2020, Savanna faces a one-million-square-foot hole in the building that it now needs to fill.”
PYMNTS has covered what’s often called the “Amazon Real Estate Effect.”
That effect can be wide-ranging (remember: nothing happens in a vacuum). For instance, when Amazon was taking bids from cities across the country for its new headquarters projects, some of those candidates — at the very least — put on paper and made public desires to improve public transportation and other infrastructure and services. There is absolutely no guarantee those plans will ever be developed further by those cities, but that’s not out of the question. Even if such projects take decades, some of the planning that went into those Amazon HQ bids will find their way into other official planning documents down the road, and could serve as a foundation for local development efforts.
That’s just a short review of how the dust is settling the day after Amazon’s decision about New York City. The eCommerce giant’s choice to not build in New York City will have impacts — economic and political — whose full weight will not be felt for years.