The Public/Private Deals Driving Long Island City's Transformation
From development incentives to public transit, how NYC has helped spur LIC's growth
By Rey Mashayekhi
Long Island City’s evolution into one of New York City’s most dynamic neighborhoods (and most active real estate submarkets) is the result of not one but a confluence of factors -- a perfect storm of market fundamentals, economic cos and inherent truths. LIC’s location, for instance, is near-perfect, and its public transit offerings are among the best in the entire city; that, coupled with the remarkable trajectory of the NYC residential market and the emergence of the TAMI and “creative” office sector, have helped draw significant real estate investment to the area over the past decade.
But Long Island City’s success story isn’t just down to real estate developers understanding the neighborhood's potential as an investment opportunity. LIC has also benefitted from public initiatives and public/private partnerships that have sought to flesh out that potential, via projects seeking to bolster the area’s commercial, transportation, infrastructure, affordable housing and educational offerings.
Such projects have promised to pump billions of dollars into the neighborhood’s economy -- whether through job-creating investments in the biotechnology sector, affordable housing developments featuring new public schools and amenities, or ambitious new public transit options. While the City of New York and public organizations have spearheaded many of these initiatives, private interests have also played a critical role in helping bring them to fruition.
Here are some of the more notable publicly-assisted investments and projects that have helped transform Long Island City:
In December, Mayor Bill de Blasio announced a $500 million program seeking to develop a new “life sciences” campus in New York City that would generate up to 16,000 new jobs in the healthcare and biotechnology sector. The initiative, LifeSci NYC, could prove a massive opportunity for LIC; the new campus will be located in either Long Island City or Manhattan’s Lower East Side, per NYC Economic Development Corp. president Maria Torres-Springer.
The city hopes LifeSci NYC will boost New York’s medical and biotech research and development sector, attracting new businesses and creating thousands of new jobs in the process. The program will include a $100 million investment by the city in a “world-class facility” that will “service as an institutional anchor for the life sciences industry,” with the goal of creating nearly 3 million square feet of space for life sciences companies over the next 10 years.
The city has sought to incentive the development of the new campus through the NYC Industrial Development Agency (IDA), and put out a request for proposals to prospective developers and landlords late last year. NYC Councilman Jimmy Van Bramer, who represents Long Island City, said he would advocate for the campus to be built in the neighborhood -- saying he could “think of no better place to locate” the life sciences hub.
In announcing LifeSci NYC, the city said it is looking to build an “anchor” for the life sciences industry “much as Cornell Tech serves as an anchor for applied sciences and engineering.” While the Ivy League university’s new technology-focused campus is currently being constructed across the East River, on Roosevelt Island, it is also expected to have a positive impact on Long Island City.
The Bloomberg administration invested much time, effort and capital into Cornell Tech, which will occupy a roughly 2 million-square-foot campus on Roosevelt Island and has benefitted from $100 million in capital contributions from the city. But beyond the 12-acre campus itself -- the first phase of which is slated to open this summer -- the project is expected to act as an economic driver, particularly for the adjacent Queens waterfront.
About 2,000 students and nearly 300 faculty and staff are expected to call Cornell Tech home at any given time, and the development will likely add to existing demand for housing that has spurred more than 22,000 new units in the Long Island City residential pipeline. With an ever-growing stock of bars, restaurants, stores and other retail, it’s also fair to assume that commerce in LIC will benefit from Cornell Tech traffic.
In November, the city announced further details about the Brooklyn-Queens Connector: an ambitious 16-mile streetcar route that would potentially run from Astoria to Sunset Park, connect Queens’ and Brooklyn’s waterfront neighborhoods and add yet another route to Long Island City’s bountiful public transit options.
The streetcar route, known as the BQX, is still in the early stages; construction wouldn’t start until 2019 and wouldn’t be completed until 2024 at earliest, and estimates peg its cost as $2.5 billion. But it would increase access to neighborhoods that are presently “unders erved transit desert[s],” according to the EDC, via roughly 30 separate stops spread out along the East River waterfront -- including Long Island City.
The plan has gained support from many within the real estate industry; Friends of the Brooklyn Queens Connector, a non-profit group advocating the streetcar, is reportedly backed by major developers including Two Trees Management and the Durst Organization. The real estate industry’s enthusiasm for the project is go great that the De Blasio administration reportedly balked at the suggestion of letting private developers assume the cost of the BQX.
Hunter’s Point South
One of the most important developments on the Long Island City waterfront in the past decade is also a testament to how successful a well-executed public/private partnership can be. City Hall continues to team with some of its biggest private real estate developers on Hunter’s Point South, which will not only heed up to 5,000 new apartments (60 percent of them affordable) and thousands of square feet of new retail space in the neighborhood, but also needed amenities like new public school buildings and a brand new park.
The first phase of Hunter’s Point South featured Related Companies leading a development team that has since finished a two-building, 100-percent affordable residential complex featuring 925 apartments. It also included a new 1,100-seat school building and the first portion of Hunter’s Point South’s impressive 11-acre waterfront park.
The city subsequently chose TF Cornerstone to round out the first phase with a 1,200-unit residential development and an accompanying 600-seat elementary school building. While TF Cornerstone’s plans were delayed last year by the discovery of an Amtrak tunnel and power lines underneath the site, construction is expected to start this year.
In June, the city issued a request for proposals for Hunter’s Point South’s second phase -- including bids for two parcels slated to hold 750 apartments, retail space, another new school building and additional community space.
Tishman Speyer’s “Gotham Center”
The development of Long Island City as an emerging commercial and office hub has been slowly gestating over the past decade. The neighborhood’s commercial real estate market has been transformed by a wave of property redevelopments and repositioning in recent years -- with numerous former warehouse and industrial buildings transformed into “creative” office and light manufacturing spaces appealing to TAMI (technology, advertising, media and information) sector tenants.
While this new supply has drawn more new businesses to Long Island City, the area still lacks in traditional Class A office space, except for one new development currently being built: developer Tishman Speyer’s massive office complex on Jackson Avenue, commonly known as Gotham Center. The 1.1 million-square-foot property, to be anchored by office tenants Bloomingdale’s and WeWork, will feature two 27-story towers rising atop a four-story retail podium. The project will rise across the street from Tishman Speyer’s enormous three-building, 1,900-unit residential development on Jackson Avenue, as well as next to Two Gotham Center -- a 21-story, 700,000-square-foot office building built by Tishman Speyer in 2011 and entirely leased to the city’s Department of Health and Mental Hygiene.
While Tishman Speyer and its partners are developing Gotham Center privately, they haven’t done so without a good deal of help from public agencies; according to Crain’s, Tishman Speyer acquired the properties for both its office and residential projects along Jackson Avenue from the city in the early 2000s, and received millions of dollars in tax breaks as part of the deal -- including $65 million in incentives for the two-towered office complex alone.
The investment appears to be paying dividends, so far as spurring the development of LIC’s business sector; Tishman Speyer is bringing needed Class A office stock to Long Island City, and has already attracted major tenants, like WeWork and Macy’s, who will now call the neighborhood home.