How NYC’s tech boom will make an impact on real estate

Published on Jul 01, 2021

How NYC’s tech boom will make an impact on real estate

New York City’s Silicon Alley is set to be revived with the 20,000 new jobs that tech behemoths Amazon, Facebook and Google plan to bring to Manhattan, mostly on the West Side, by 2022.


While the tech industry in the late 1990s centered on the Flatiron district, the center of tech is now in Hudson Yards and Chelsea. Facebook is leasing 700,000 square feet for 14,000 employees this year and Amazon recently announced it was leasing office space for 1,500 employees in late 2021.


This comes after jobs in the technology sector have increased 80% in the last decade, from 79,400 in 2009 to 142,600, according to a recent report from the New York State Comptroller’s office.


The question that those in the real estate industry are asking: Where will all these new tech employees live; Will they stay on the West Side in favor of a shorter commute; or will they move further afield?


Wendy Arriz, a broker with Warburg Realty, says younger people tend to prefer to live downtown with Tribeca, Gramercy, Chelsea, Flatiron, Lower East Side and West Village at the top of the list.


“Yet, the bottom line will depend on the income of these workers, as not every new tech employee will have the budget for some of these pricier neighborhoods,” Arriz says. “For those who can afford the luxurious, high-end properties, I imagine that these neighborhoods, along with Hudson Square will benefit the most.”


Robert Rahmanian, co-founder of real estate brokerage REAL New York, believes the new employees will crave convenience and will want to be in close proximity to their offices, so will settle in Hudson Yards, Chelsea and Hell’s Kitchen.


“It’s all about convenience and these neighborhoods have seen an upgrade in housing stock with state-of-the-art new developments,” Rahmanian says.


Martin Eiden, a broker with Compass, think it’s natural for people to want to separate home and work life.


“Thinking back to the scenario in 2003 to 2007, a lot of the old office buildings in the Financial District were being converted to residential lofts,” Eiden says. “Everyone thought the financial guys would be moving in there, but it seems to be human nature that people do not want to live right next to where their office is.”


Eiden thinks that Long Island City, where Amazon pulled out of a planned headquarters after local backlash, will see an influx of new residents, particularly with a lower price point than Manhattan.


“What people want is convenience,” Eiden says. “With the 7 train in Hudson Yards, ironically, I imagine Queens and Long Island City will be a big beneficiary. Chelsea and Hudson Yards should see a lot of activity, but even though high-tech people make good money, do most make enough buy a $4 million apartment?”


Eiden also predicts that the West 30s, considered the Garment District and traditionally home to hotels, could also evolve into an area of a lot of rental units.


“I met with a British ad exec recently and he compared New York to London,” Eiden says. “If you draw a circle around London, everything in that circle is expensive. But New York still has large amounts of pockets of space that are still undeveloped. I think this will be super for New York, there’s so much potential.”


Hunter Frick, senior vice president of marketing for Brown Harris Stevens Development Marketing, said he sees a concentration of buyers in tech fields in neighborhoods that are known to be major tech hubs, such as the Flatiron District, DUMBO and lower Manhattan, and in locations with easy transportation access to the major tech employers, such as Google in Chelsea, and Instagram in the Flatiron District.


“Similar to the San Francisco market, we see a spike in interest citywide in advance of major IPOs,” Frick said. “It’s mostly C-level executives and above on the higher end purchases.”


Broker Gill A. Chowdhury of Warburg Realty sees Penn Station as the new hub.


“I think access to Penn Station will lead to a pretty widespread among employees with a core group living in Manhattan within 15 minutes’ commute,” Chowdhury says.


Kemdi Anosike of Warburg Realty thinks up-and-coming Brooklyn neighborhoods, such as Bushwick, Cobble Hill and Crown Heights, will see the most growth.


“They have accessible train lines and with tech employees, they’re working 24 hours so being accessible is essential,” Anosike says.