Going into the new year, real estate is already expecting significant changes, including surrounding Amazon’s soon-to-be-built headquarters in both Long Island City (LIC) and Crystal City. Now, Google and Apple are hopping onboard the expansion train, promising new jobs outside the West Coast which could attract an influx of relocating talent, possibly putting a strain on the local housing markets.
Where is the expansion happening?
For Google, an expansion in New York City worth $1 billion in capital improvements promises a new 1.7 million-square-foot campus (Google Hudson Square) that could add over 7,000 new jobs to the area. In addition, the company is looking to lease additional space at Pier 57 and make a $2.7 billion purchase of Chelsea Market, according to the Wall Street Journal.
While Google already employs over 7,000 people in NYC through core operations, search, advertising, maps and YouTube, the new headquarters would double the present staff, creating stiff competition for rival tech companies Amazon and Apple.
Apple, meanwhile, is spreading out across the U.S., adding 100 jobs in NYC, but also expanding in Pittsburgh, Pa.; Boulder, Colo.; Seattle, Wash.; and San Diego and Culver City, Calif. In addition, Apple is building a new campus in Austin, a $1 billion investment located just a mile away from Apple’s existing Austin facilities. The 133-acre, renewable energy-powered campus is set to accommodate 5,000 employees at startup, but has the capacity to house a staff of 15,000. It is expected to make Apple the largest private employer in Austin when fully staffed.
Additionally, Apple is hoping to invest an additional $10 billion in data centers across the U.S. in the next five years, with $4.5 billion authorized for 2019 and 2020. These expansion goals are part of Apple’s overarching plan to create 20,000 new jobs in the U.S. by 2023 in its engineering, R&D, operations, sales and customer support departments.
What’s the real estate impact with regard to housing and technology?
Amazon’s HQ2 is already influencing market activity and prices in LIC; in fact, Skyline Tower, which will be located directly across from HQ2, recently received a pricing amendment that increases the 67-story building’s total sellout by $80 million (not including penthouses) from its record $1 billion. Modern Spaces, a real estate search website, has already received over 700 buyer inquiries before sales have launched.
Additionally, in preparation of increased foot traffic, the building’s developer has agreed to a $16 million upgrade of the subway entrance at the base of the building to improve transportation options for residents.
So, what do Google and Apple’s expansions hold in store for their respective locations?
RISMedia spoke with two of the industry’s leading technology experts, Edward Tull, director of Technology and Process Management for JB Goodwin REALTORS®, and David Greenberg, a 2019 Real Estate Newsmaker and the founder and CEO of Updater, a relocation technology company, to gauge their impact and what the future holds for Austin and NYC as a result of Apple’s and Google’s expansion plans.
LD: Edward, how do you foresee Apple’s Austin campus impacting local real estate?
Edward Tull: Initially, we may see a decrease in available housing. Since Apple plans to incrementally increase to 15,000 employees, we do not feel that there will be an emergency shortage of housing. With new-home communities and apartment complexes going up every day, Austin will be able to handle the influx of people.
LD: David, do you believe Google’s new campus, along with Amazon’s recent expansion news, to be a detriment to the city of New York, or a boon?
David Greenberg: Google’s expansion may bring over 10,000 new jobs to NYC and Amazon may bring another 25,000. While NYC will see great benefits from these tech titans expanding their NYC footprint, these moves will also change the landscape of the city. The rate at which property prices will spike in Long Island City, for example, will likely dramatically outpace normal growth. Huge spikes in prices along the 7 train and G line will bring major changes to neighborhoods that have never seen changes as rapid as we now expect—neighborhoods that are relatively affordable today will become unaffordable for most very quickly.
I’ve heard from agents that there’s already a massive influx of buyers trying to get ahead of Amazon’s move in Long Island City. I also foresee major challenges for the NYC public transit system, which is already in a tough spot.
LD: In terms of technology, what role will it play in the expansion and in relocation efforts?
DG: I’ve always believed NYC’s status as the country’s second biggest tech hub, rivaling the Bay Area, has been overlooked. This is partly because tech is just one of many amazingly successful sectors in NYC, sharing the limelight with finance, fashion, advertising and the arts—but many of the country’s greatest tech products are built in NYC. Competition in the NYC tech community for talent is already fierce because there are many great, funded startups.
I predict this talent competition will increase substantially over the next few years with Google’s expansion and Amazon’s HQ2; however, I’m hoping the short-term competition crunch will ultimately subside as a bigger share of the country’s top tech talent will be attracted to NYC because of Google and Amazon’s presence, Cornell Tech and top universities, and the incredible success of other NYC tech companies.
LD: Edward, how do you believe these tech titans will impact housing?
ET: Austin is also a great source of tech talent. I am sure that a good portion of the initial 5,000 hires already live here. Austin is frequently in the news for jobs, housing and transportation. New jobs require housing and can put a strain on transportation. Innovation often comes from experiencing a frustration and attempting to resolve what caused it. I can see these companies utilizing technology to improve access to housing and finding new ways to improve public transit.
When such large companies plant roots in an area, they bring with them a national spotlight. My hope is that they are committed to responsible growth and support of the cities that they move into.