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What Happens After Amazon’s HQ2 Move to New York City?
Rose Klimovich, a faculty member in the O’Malley School of Business, has studied Amazon’s impact on the retail economy.
Earlier this month, Amazon.com, Inc. settled on two locations for its HQ2: Arlington, Virginia and Long Island City, Queens, about 12 miles southeast from Manhattan College’s campus in the northwest Bronx. While the process took more than a year to complete, Queens appears to be a natural fit due to New York City’s large population, access to transit and the incentives city and state leaders offered the company.
“For a long time, New York City has not liked being tied as much to the financial industry as they have been, because that industry goes up and down,” Klimovich said. “So it’s not particularly surprising they’ve aggressively gone after a technology company like Amazon. Not only do you get a tech company, you get more press around New York City becoming a tech hub, which could attract others.”
And New York City’s tech sector has grown. In 2017, The Office of the New York State Comptroller reported that technology employment increased by 57 percent between 2010 and 2016, creating 46,900 jobs, and growing more than three times faster than the rest of the private sector.
Creating Jobs and Tech Clusters?
As part of its agreement, New York will give Amazon as much as $1.7 billion in subsidies through a variety of programs. In return, Amazon has promised to build a school, bring 25,000 full-time high-paying jobs, approximately $2.5 billion in Amazon investment, 4 million square feet of energy-efficient office space with an opportunity to expand to 8 million square feet, and an estimated incremental tax revenue of more than $10 billion over the next 20 years as a result of Amazon’s investment and job creation.
“The Amazon HQ is going to create jobs. But more importantly, Amazon may create a technology cluster – other companies moving to Long Island City to interact with Amazon and support their needs,” Klimovich explained. “But I can see for the people that live in that area today, they’re not going to like this. There might not be a big benefit for them. Housing prices will continue to rise and congestion on mass transit and the roads will increase.”
Long Island City is already the priciest neighborhood in Queens: The median rent in the borough’s northwestern section, which includes Long Island City, is just under $3,000/month, according to the latest Douglas Elliman market report; the median price for a condo, meanwhile, is just over $900,000.
What Happens Next?
After settling into Long Island City, Klimovich expects Amazon to continue to grow in their present businesses and expand into other areas. One question she will pose to her marketing classes is what happens to Amazon's competitors – the large-scale brick and mortar retail outlets like Walmart and Target?
“Walmart is trying to move into Amazon’s space and at the same time, Amazon is trying to move into Walmart’s brick and mortar space,” Klimovich says. “The question is when all that happens, who will be the winners and losers?”
At a time when the retail economy is being led by those heavyweight companies, sorting out the winners and losers, and what job opportunities will arise, will certainly be a topic of discussion in Manhattan College classrooms over the next few years.