Amazon Conducting Search for Second $5B HQ; Makes Major Investments in New York City

John Jordan | September 2017

Amazon is leasing 360,000 square feet of space at 5 Manhattan West.

NEW YORK CITY—E-commerce giant Amazon has certainly garnered headlines of late for its massive real estate requirements. Earlier this month, the Seattle-based retailer announced it would be conducting a national search for a second U.S. corporate headquarters valued at approximately $5 billion.

While the heady requirement has economic development officials across New York State and elsewhere scurrying to formulate attractive proposals, Amazon also made two recent announcements involving significant investment in New York City.

On Sept. 21, Amazon announced it was leasing 360,000 square feet of space at Brookfield Property Partners’ 5 Manhattan West office building and adding 2,000 new jobs to its New York workforce.

The new lease came only a few weeks after Amazon’s announcement on Sept. 7 that it was building an 850,000-square-foot $100-million fulfillment center on Staten Island.

The announcement for its 15-year lease at 5 Manhattan West will involve the creation of more than 2,000 new jobs in New York City over the next three years. The Staten Island fulfillment center is expected to employ 2,250 operations workers. Amazon officials say that the offices at 5 Manhattan West will serve as the primary New York location for Amazon Advertising. At that location, Amazon expects to hire software engineers, data analysts, economists as well as teams involved in marketing, product, design, and engineering to support Amazon Advertising, Amazon Fashion and Amazon Web Services operations. In total, Amazon, which already employs more than 1,800 workers in New York City, will create close to 6,000 jobs across New York State by 2019, the company states. In the city, Amazon also has a Fashion Photo studio in Brooklyn, an Amazon Books store on Columbus Circle and a Prime Now hub on 34th St.

“We’re excited to expand our presence in New York—we have always found great talent here,” says Paul Kotas, senior vice president of worldwide advertising for Amazon. “Last January we announced our plans to create 100,000 full-time, full benefit jobs in the US by mid-2018—and we are on track to reach that goal.”

Gov. Andrew Cuomo says of Amazon’s latest expansion, “Amazon’s decision to expand in New York City is proof positive that the strong economic climate of this state, and New York’s diverse workforce and talent, are helping to attract top-notch companies from around the world.”

New York City Mayor Bill de Blasio, in a statement, hyped the city’s talented workforce and diverse economy that features the most innovative companies in the world. “We are excited to see Amazon bringing thousands more high-paying jobs to its New York City offices and increasing its footprint on the West Side,” the mayor says.

Amazon will occupy the entire sixth and seventh floors and portions of the eighth and 10th floors of the 16-story, 1.8-million-square-foot Five Manhattan West office building. The Amazon lease brings the property to 99% leased. JLL’s Derek Trulson, Josh Stuart, Bill Peters and Clay Nielsen represented Amazon in the lease transaction. Brookfield was represented by Bruce Mosler, Josh Kuriloff, Rob Lowe, Ethan Silverstein and Matthias Li of Cushman & Wakefield, and in-house by Jeremiah Larkin, Duncan McCuaig and Alex Liscio.

“Amazon’s expansion is the latest example of a leading company drawn to Manhattan West by the unparalleled access, state-of-the-art office space, and experiential culinary, health and wellness and fashion provided by Brookfield’s newest place-making destination,” says Ric Clark, senior managing partner and chairman of Brookfield Property Partners. He adds that Manhattan West is currently attracting what he terms as “unprecedented levels of interest” for large blocks of space across One and Two Manhattan West, as well as at The Lofts.”

Brookfield recently developed the location for Amazon’s new European headquarters in the United Kingdom at Principal Place, a new 621,000-square-foot office building on the border of Shoreditch and the City of London. Principal Place is part of a mixed-use complex that will also feature a 50-story residential tower, 20,000 square feet of retail and a half-acre central piazza.

At Five Manhattan West, formerly known as 450 W. 33rd St., Brookfield undertook a $300-million redevelopment program designed by REX Architects to transform it into a collaborative urban space with large floor plates and floor-to-ceiling glass. In March, Whole Foods announced it would anchor the ground floor retail space of Five Manhattan West with a 60,000-square-foot location.

A Brookfield spokesperson said that in the past four months alone, Brookfield has signed four leases totaling nearly 1 million square feet, including a 305,000-square-foot lease with JPMorgan Chase.

Brookfield’s Manhattan West is an eight-acre, six-building mixed-use development, stretching from Ninth Avenue to Tenth Avenue and 31st Street to 33rd Street. At full build-out Manhattan West will feature nearly 6 million square feet of Class-A office space, luxury residences, a boutique hotel, as well as landscaped gardens and street-front retail.

One Manhattan West is a 67-story, 2.1-million-square-foot office tower rising on the northeast corner of Manhattan West at Ninth Avenue and 33rd Street that is anticipated for delivery at the end of 2019. Two Manhattan West will be the second new office tower constructed on the southeast corner of the site on Ninth Avenue and 31st Street. “The Lofts” midblock on 33rd Street is a boutique, 13-story building that features high ceilings, terraces and exposed I-beam columns.

In March, Brookfield opened The Eugene, a 62-story, 844-unit luxury residential tower located at 435 West 31st within the Manhattan West site.

In terms of Amazon’s Staten Island fulfillment center project, the facility is being developed by Matrix Development Group of Monroe Township, NJ, the owner of the Matrix Global Logistics Park. Matrix is expected to begin construction immediately on the Amazon project. In addition, the park also includes a 975,000-square-foot building that is being built on spec. Work on that building began in the first quarter of this year and is nearing completion.

The Amazon fulfillment center is the company’s first in New York State and will feature innovative technology such as Amazon Robotics. The firm’s U.S. fulfillment network consists of more than 70 fulfillment centers.

Sanjay Shah, Amazon’s VP of customer fulfillment says “We are excited to bring our first fulfillment center to New York and work alongside the state’s incredible workforce. The support of local leaders has been instrumental in our ability to come to New York, and we are grateful for the welcome we’ve received to bring thousands of new jobs with benefits starting on day one.”

Empire State Development has offered Amazon up to $18 million in performance-based tax credits through the Excelsior Jobs Program. In addition to the 2,250 new jobs at the facility, Amazon will retain an additional 886 jobs in New York over the next five years in exchange for the incentives.

Staten Island officials hailed the deal with Amazon as a major job generator and a boost to its West Shore. Staten Island Borough President James S. Oddo said of the deal, “We’ve been talking about the West Shore of Staten Island as our borough’s ‘Jobs Coast,’ and today that talk becomes reality in a big way. In fact, this project will be the biggest single job creator in our borough’s history.”

Matrix Development has been a major player in the industrial market in New Jersey and the New York metro region for that matter. The firm has developed in excess of 35 million square feet of industrial space throughout New Jersey, New York and Pennsylvania and 100% of those facilities are fully occupied.

The firm was an industrial development pioneer of the New Jersey Turnpike Exit 8A and later Exit 7A markets, building more than 10 million square feet of properties that have transformed those locales into one of the strongest logistics corridors in the region.

Matrix recently completed a 565,000-square-foot building for pharmaceutical firm AmerisourceBergen and paper goods company Amscan in Newburgh.

John Jordan
Editor, Real Estate In-Depth