Amazon ditching New York City makes Virginia real estate even more attractive

Virginia still wants Amazon.
Virginia still wants Amazon.
Image: REUTERS/Kevin Lamarque
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Amazon’s decision to back out of its plan to build a second headquarters in New York City is already hitting real-estate stocks.

Shares of realty trusts and property companies banking on Amazon’s investment in New York City edged lower on Feb. 14, likely reflecting uncertainty after the e-commerce company suddenly backed out. On the other hand, shares of real-estate companies with holdings in northern Virginia, where Amazon reaffirmed its commitment to developing a new headquarters, gained.

Shares of SL Green Realty, New York City’s largest office landlord, sank 1.4% on Feb. 14 after Amazon canceled plans to build a headquarters in Long Island City, a revitalized neighborhood of Queens across the East River from midtown Manhattan. Alexander’s Inc. and its manager Vornado Realty Trust traded down 1.4%, and 0.9%, respectively.

All three had been bullish on what a New York Amazon headquarters would do for their portfolios. SL Green CEO Marc Holliday in January highlighted Amazon coming to Long Island City as part of the “incredible amount of economic activity in the city” driving leasing momentum. In a joint earnings call earlier this week, Steven Roth, who is chairman and CEO of both Alexander’s and Vornado, called Amazon’s deal with New York “a terrific deal for the city and a terrific us.” “If the political climate in New York blows this deal,” Roth added, “it would be the stupidest damn thing I have ever seen.”

While the market shied away from stocks tied to Amazon’s Long Island City presence, shares of real-estate companies that stand to gain from Amazon’s investments in Crystal City, Virginia, and Nashville, Tennessee, went the other way. JBG Smith Properties, which owns much of the available office space in Crystal City, jumped 1.4%. Piedmont Office Realty Trust, whose CEO earlier this month said he was bullish on the company’s Virginia holdings in part because of Amazon, edged up 0.3%. Mack-Cali Realty Corp, which has several projects in the greater Washington DC area, including a partnership in Crystal City, also gained 0.3%.

Shares in Highwood Properties, which has developments underway in Nashville near where Amazon is opening an operations center with 5,000 jobs, rose 1%. “Needless to say, we remain jazzed about the outlook for Nashville,” Highwood CEO Edward Fritsch said on the company’s fourth-quarter earnings call on Feb. 6—a sentiment that was probably even more true after hearing Amazon would stick with Nashville on Feb. 14.