Amazon’s Queens kiss-off left the owners of Long Island City’s towering icon, One Court Square, under a looming, little-noted deadline in its quest to find new tenants.
A city tax credit for companies that move employees to the outer boroughs — which could have saved Amazon $900 million over 12 years had it delivered its entire, 25,000-job campus — dies on June 30, 2020.
The expiration puts One Court Square landlord Savanna into a bind as it scrambles to replace longtime major tenant Citigroup, which will exit from 1 million square feet late this year or early in 2020.
To fill the Citi space, Savanna hopes to exploit a powerful tenant incentive: the Relocation and Employment Assistance Program (REAP), which can save a tenant up to $20 per square foot in business income tax credits for relocating jobs from outside the city or from below 96th Street. REAP benefits have helped lure businesses to Dumbo, MetroTech and the Brooklyn Navy Yard.
When we first reported last July that Citi planned to leave Court Square, Savanna’s brokers noted that while the tower’s asking rents were $55 to $65 per square foot, as-of-right city tax incentives — of which REAP was the largest — could reduce a tenant’s effective occupancy cost by as much as $25 a square foot.
Amazon announced its Long Island City “campus” in November. It said it would lease most of One Court Square as an interim step to get the project rolling.
Savanna said Amazon was taking 1 million square feet of the tower’s total 1.4 million square feet. Amazon’s apparent commitment cost Savanna three precious months of time to woo tenants before the REAP credits expire.
A Savanna spokesperson said it was “respectfully declining to comment on any of this.” Normally chatty brokers and lawyers were said to be under a “death-ray” confidentiality agreement and either wouldn’t comment or didn’t return calls and emails.
While Savanna might well end up doing fine at Court Square, which has been smartly re-tooled for today’s office users, things came up snake-eyes for nearby landowner Plaxall. It lost a prospective contract to sell almost 300,000 square feet of land to Amazon for a likely fortune. TF Cornerstone, which was to be Amazon’s development partner, got screwed, too.
Amazon’s change of heart could also theoretically imperil the plan by Altice, a Citi subtenant at the top of Court Square, to move into Related Cos.’ Paragon Building nearby. As we reported on Feb. 4, Altice was getting bumped from Court Square by Amazon and had a letter of intent for Paragon’s 135,000 square feet.
But sources said there’s no indication yet of Altice changing its mind. “They really like the Paragon, and they don’t want to be alone in Court Square,” one said. Related wouldn’t comment.
Watching the Amazon fallout with interest, but no worries, is Tishman Speyer. The developer’s 1.2 million-square-foot project known as The JACX, a few blocks away, is fully leased, mostly to Macy’s. Tishman first invested in Long Island City in 2003.