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The prime seller's market in New York? Amazon's new neighbourhood

Brokers note sudden gold rush of interest in Long Island City's condo market

Long Island City in the borough of Queens in New York City. News that Amazon would build a vast campus in the neighbourhood and hire more than 25,000 people has stirred political controversy and drawn mixed reaction from New Yorkers.

New York

EVEN in Long Island City, Queens, one of the fastest-growing neighbourhoods in New York City, 2018 was not exactly shaping up as a banner year for real estate.

Heading into the traditionally slow winter season, condominium sales had slumped. But then, in early November, news broke that Amazon would build a vast campus in the neighbourhood and hire more than 25,000 people. The deal has stirred political controversy and drawn mixed reaction from New Yorkers. But it has been greeted with euphoria among real estate brokers who have seen a sudden gold rush of interest in the local condo market.

Some inquiries have come from Amazon employees, but since only a few hundred will arrive in 2019, most buyers have been investors and New Yorkers looking to relocate to a neighborhood on the rise.

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Asking prices jumped. Buyers rushed to make deals. Inactive listings turned into bidding wars. Brokers are taking bids via text message.

And the rush has fuelled concerns that a gentrifying neighbourhood will become even less affordable, as "tech bros" push out the working class.

The initial hype has levelled off, and with interest rates rising and signs of a recession, the market's ascent could come to a halt. But for now, while the rest of the city remains sluggish, the Amazon effect has changed the game in Long Island City real estate, as visits with three sleep-deprived brokers showed.

Kayla Lee put on a hard hat and took a large work elevator to the roof of Corte, an eight-story condo building under construction where she is the sales director. She pointed to the nearby Citigroup Building, where Amazon has rented office space for the first wave of employees. A few blocks in the other direction was the future site of Amazon's headquarters on the East River, facing Manhattan.

With Amazon's arrival, she said, the street below, 44th Drive, would become a "golden road" lined with shops and restaurants.

The apartments Ms Lee shows at Corte are barely framed out and will not be habitable till October. They range from US$560,000 studios to penthouses selling for nearly US$3 million.

Since the Amazon news, Corte has raised prices about US$30,000 per apartment; more increases are planned. The Amazon deal, Ms Lee said, has boosted buyer confidence.

Some buyers texted her offers moments after viewing units and are now in contracts to buy. Of the building's 85 units, 57 are under contract, with 35 having been bought after the Amazon deal.

A handful of Amazon employees from Seattle have expressed interest, Ms Lee said, adding that the number of daily showings had jumped from a half dozen to about 28. "People want a slice of the pie," said Ms Lee, 41, who led a potential buyer, Darren Floyd, 48, through a three-bedroom priced at US$2.3 million.

Mr Floyd, who creates e-commerce startups and lives in Chelsea, said moving to Long Island City would shorten his weekend trips to East Hampton and put him in an up-and-coming neighbourhood. "You can just kind of feel that things are moving," he said. "You don't want to buy after the wave has come through."

Patrick Smith was bearing good news when he stepped into a spacious two-bedroom penthouse on the seventh floor of the Fifth Street Lofts, a couple of blocks from the future Amazon headquarters site. The apartment owner, Michael McGoldrick, had bought the condo for US$848,000 nine years ago and recently decided to sell after upgrading it and purchasing a deeded parking space.

His asking price was US$1 million more - US$1.85 million - but offers had fallen slightly short. Now, with a sturdier market, Mr Smith, a broker with Stribling & Associates, was here to tell him that a buyer was willing to pay the asking price.

Mr Smith, a longtime Long Island City resident and broker, puts out a weekly report for clients that includes weekly totals of all signed contracts reported in the neighbourhood. Recent levels of buyer interest and sales have soared, he said.

Before the Amazon announcement, there were fewer than five signed contracts per week in 2018, he said. But since the Amazon news, the figure has nearly doubled - and does not include many recent units that have gone into contract. "We're the only neighbourhood in New York that is a seller's market," said Mr Smith, who has taken to categorising local listings into separate tiers, based on their proximity to the Amazon site.

"No one knows how long this will be the new normal," he said. He is working with an investor hoping to purchase 10 apartments. "This has always been a growing and desirable neighbourhood, but since the Amazon announcement, we've been catapulted by unprecedented national and international exposure."

Paris Hampton, a sales associate at Galerie, a 182-unit condo building across from the MoMA PS1 museum, smiled as a potential buyer, Ian Samlin, browsed the building's showroom. Mr Samlin, 25, runs a money-lending firm in Manhattan and rents an apartment in midtown Manhattan with friends, but the Amazon announcement prompted him to start looking across the East River. "There's a buzz, and people know what Long Island City is now," he said.

The plush sales gallery that shows off the luxury amenities of the 11-story Galerie was inundated after the Amazon deal. "The Amazon news hit and created a tsunami," Ms Hampton said. "We had to start doing group tours."

Galerie, too, is still under construction, so buyers have been bidding on units based on floor plans, Ms Hampton said. "People are excited to be part of a new neighbourhood evolving in New York City," she said.

About 50 units have been sold in the nearly seven weeks since the Amazon deal was announced, nearly equalling the roughly 55 sold in the building's first nine months on the market, said Ms Hampton's boss, Vanessa Connelly, the director of sales at HPDM, which handles marketing and sales for Galerie. NYTIMES