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New Sheriff in Town

What All the Amazon Talk Means for New York City

You’d be hard-pressed to have avoided the Amazon-meets-NYC buzz over the past few months. And you’d have to live under a pretty generous rock to miss the slough of knee-jerk headlines and over-the-top projections the company has garnered recently. Everything from its 13.7 billion acquisition of Whole Foods to its developing smart home battle with Google has graced the headlines of every tech magazine worth its salt. So it naturally follows that Amazon’s ever-encroaching presence in New York City has raised quite a few questions—and in some cases red flags. And while Amazon is certainly changing (and for some killing) the brick-and-mortar retailscape, it’s also ushering in a new era for warehousing and logistics, creating an inevitably deep impact that will change New York City as we know it.

Last September, the Seattle-based retail giant announced its plans to open an Amazon office in New York City at 5 Manhattan West. The location is set to open this year, creating about 2,000 jobs over the next three years. The 360,000-square-foot location will house advertising, Amazon Fashion, Amazon Web Services, as well as a handful of data analyst and engineering divisions. The location was not Amazon’s first foray into the Big Apple, as it already employed 1,800 people in Manhattan, with two Amazon Books locations and plans to open a 885,000-square-foot fulfillment center on Staten Island.

But this fulfillment center was far from the beginning, as online retail success has created a newfound demand for warehousing and logistics in the already-cramped New York. And with online retailers like Amazon guaranteeing two-day delivery, everything from notebooks to board games needs to be shipped quickly, requiring more distribution points. “This is the best I’ve seen it in my 35-year career,” Craig S. Meyer, president of the logistics and industrial services group for JLL, told the New York Times.

The warehouse hubbub recently culminated in Seagis Property Group acquiring a 80,000-square-foot industrial building in Maspeth, Queens just this past January. The warehouse will be utilized by online retailers like Amazon, a result of the continuous demand for e-commerce as opposed to brick-and-mortar shopping. Expect to see many more warehouse acquisitions crop up over the next few years. And, as it is estimated that Amazon controlled 44 percent of all online sales last year, it’s reasonable to assume that a great deal of this e-commerce boom is thanks to Amazon as opposed to Walmart, Apple, or Ebay.

But the biggest Amazon-meets-NYC moment is Amazon’s second headquarters (HQ2). 238 cities and regions have submitted bids for the company’s first headquarters outside of Seattle, including New York. The portfolio’s estimated cost is $5 billion, taking up 62.5 million square feet across three boroughs, with the new headquarters estimated to create 50,000 new jobs.

It’s stiff competition, but the 50,000-job promise keeps the bids rolling. It’s one of the biggest headquarters contests ever, and will undoubtedly change the landscape of whichever city it ends up in. While for many New York City is far from a frontrunner due to the cost of living and limited space, a recent study by Reis Inc. placed New York as the top bid, followed by San Francisco. One of the biggest things New York has going for it over other bids is its transportation system, as the subways, buses, and regional trains are some of the best in the country. And while this survey is far from conclusive, New York’s public transportation might just give it the desired edge to capture the coveted HQ2.

HQ2 will be announced early this year, and regardless of where it ends up, New York will continue to evolve as a result of Amazon’s seemingly endless potential for growth. Expect warehouses to take precedent over brick-and-mortar (malls have already been torn down across the country in favor of more warehouse space), and more Amazon offices to open across the city, even if these offices are not a part of the now-notorious HQ2.

As of publication, New York City and Newark were named as two of the top 20 finalists for further consideration for HQ2. In the words of Mayor de Blasio, New York City is the “global capital of commerce, culture and innovation,” and it may very well add HQ2 to its portfolio very soon.

 

           

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