Pedestrians walk past Google headquarters in the Manhattan borough of New York City, New York, U.S., December 17, 2018. REUTERS/Jeenah Moon
In February 2019, after much fanfare, Amazon abandoned plans to build a second headquarters in the Queens borough of New York City following a major backlash over tax incentives it would receive. Less than a year later, the e-commerce giant revealed it is indeed expanding in the Big Apple — only it’s coming to Manhattan, not Queens.
While politicians like U.S. Rep. Alexandria Ocasio-Cortez saw the latest news as a win for the city that shows tax incentives aren’t necessary to attract tech companies, some New Yorkers would point out that tech giants are still staying away from the outer boroughs like Queens.
A Yahoo Finance analysis of the major five tech companies — Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Google (GOOG, GOOGL), also known as the FAANG among investors — shows big tech has already made inroads into New York City, but most of their offices concentrate in one of the five boroughs — Manhattan.
Amazon, for example, announced it’s leasing office space for 1,500 employees at Manhattan’s Hudson Yards, a mixed-use mega-development, without any tax incentives, weeks after Facebook signed a lease for over 1.5 million square feet of office space in the same area.
(David Foster/Yahoo Finance)
“Won’t you look at that: Amazon is coming to NYC anyway - *without* requiring the public to finance shady deals, helipad handouts for Jeff Bezos, & corporate giveaways,” Ocasio-Cortez tweeted just after Amazon’s announcement on Dec. 6.
But for Queens and the other outer boroughs of New York City, the lease does not bring what HQ2 once promised, according to Yahoo Finance’s analysis. The outer boroughs have yet to claim any Amazon office space, or space from any other tech giants including Facebook, Google, Apple, and Netflix.
“Although Amazon is opening in Hudson Yards, it’s not what they were planning, which is a devastating loss to our [the outer boroughs’] local economies,” said Andrew Feldman, New York City commercial broker at New York City-based brokerage Compass. “That deal would have catapulted the mindset of expansion into the outer boroughs.”
‘We don’t have a problem bringing business to Manhattan’
Silicon Valley has long been a hub for big tech. Google’s parent company, Alphabet, alone occupies 11.2 million square feet of office and building space in the company’s corner of Silicon Valley, Mountain View, Calif., according to the company’s latest annual report. But big tech companies have upped their presence in the Big Apple, with a marked progression in 2018, when Google, Amazon, and Facebook announced New York City expansions.
In fact, Manhattan has become is a veritable hub for big tech offices, claiming over 6.2 million square feet of leases, according to a Yahoo Finance analysis of publicly disclosed commercial real estate.
But Facebook, Amazon, Apple, Google, and Netflix have not shown much interest in the outer boroughs of New York City for their core workspace. Amazon was offered $3 billion in local and state tax incentives to come to the Long Island City neighborhood of Queens last year, with the promise to add 25,000 tech jobs to the Queens waterfront.
“We don’t have a problem bringing businesses to Manhattan but we have been trying for decades to get that Queens waterfront developed,” New York Gov. Andrew Cuomo told the Associated Press last month after the news came out about Amazon’s Hudson Yards lease.
Tech giants don’t have any offices in the outer boroughs, although they do have 1.1 million square feet of other types of commercial spaces like warehouses in Staten Island, Brooklyn, and the Bronx. There were no big tech commercial leases in Queens.
While Manhattan leases might be more expensive, they could attract workers who do not want to commute to an outer borough. High-paid tech employees fall into a demographic that could afford Manhattan rents, which average $3,639 for a one-bedroom, according to an August 2019 report from the New York City-based real estate firm Douglas Elliman.
“Big tech businesses are in Manhattan because they want to attract the young, they want to attract the best of the best, they want you to be young, smart, and hip,” said Dottie Herman, CEO Douglas Elliman.
Only 15.5% of big tech NYC commercial space is in an outer borough, according to a Yahoo Finance analysis. Amazon is the main player outside Manhattan, claiming just over 1 million square feet, including a photo studio in Brooklyn, a Prime Now delivery warehouse in the Bronx, and a fulfillment center in Staten Island. Netflix has a 161,000-square-foot studio in Brooklyn.
Amazon, Facebook, and Google all clocked in from 2.2 million to 2.5 million square feet of New York City office space each, together comprising about 95% of big tech’s NYC office space. Netflix had only .3 million, while Apple held a mere 45,000 square feet in New York City office space. This list does not include retail locations, which would significantly add square footage for Apple and Amazon.
While some residents and local politicians don't want to provide financial incentives to bring big business to the outer boroughs, Feldman of Compass believes that tech giants will eventually venture beyond Manhattan — especially with the right tax breaks.
“People already see the value of being one or two stops out, and because of that, the prices there are not that different,” Feldman said. “Eventually, I think it’ll happen. That is part of a larger equation — taxation is always a concern and an incentivizing force.”
Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter
Krystal Hu is a reporter at Yahoo Finance. Follow her on Twitter: @readkrystalhu
