Real Estate Weekly
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Opinion

Blaming “AOC effect” is a cop-out by Amazon

By Tom Corsillo

Nine months after Amazon scrapped plans to build a new headquarters in Long Island City, people in and around the real estate industry continue to dissect how the world’s largest retailer managed to fail so spectacularly – and what it means for them.

That lawmakers rallied against an economic development initiative expected to generate $27.5 billion in city and state tax revenue and create 25,000 jobs has given developers in New York pause as they consider their next moves.

Land use consultants are pondering new strategies to account for what they have dubbed the “AOC effect,” with vulnerable legislators frantically trying to out-progressive each other, fearful of primary challenges from the left where the influence of Representative Alexandria Ocasio-Cortez and the Democratic Socialists of America continues to grow.

But while the AOC effect is real, crediting Rep. Ocasio-Cortez with the victory is a cop-out that absolves Amazon of its own culpability. As deft as she has proven to be in mobilizing her supporters and forcing more moderate Democratic officials to adopt her positions, the freshman Congresswoman did not defeat Amazon. In reality, the company made a series of unforced errors driven by its misguided assumption that New York would roll out the red carpet for HQ2.

Despite the lofty policy debates taking place across the country, New Yorkers still are very much focused on kitchen table issues like jobs and housing costs, and Amazon offered them a compelling value proposition.

That is why Queens residents by a more than two-to-one margin supported Amazon locating a new headquarters in Long Island City, according to a Quinnipiac University poll released in December 2018, before the company pulled out. And it also is why the AOC effect is overblown. AOC didn’t convince people Amazon was bad; she simply mobilized progressive activists predisposed to oppose Amazon.

What happened with Amazon is no different than what happens routinely with economic development projects across the five boroughs. There, it just happened on a larger scale. Virtually every project that is proposed in New York – regardless of its design, height, location or community benefits – has supporters, opponents and those who don’t feel strongly one way or the other.

That last group invariably is the largest, but the difference between the others is that supporters tend to stay quiet while opponents are loud.

So what happens? Decision makers end up hearing only from the loud voices of opposition. And land use in New York City is not about winning referenda; it’s about winning over those decision makers.

Projects that fail typically do so not due to a lack of support but because their developers do not effectively mobilize their supporters. This creates a dynamic in which decision makers know they will pay a political cost for approving proposed development projects and none for rejecting them. Naturally, they choose the path of least resistance.

This was Amazon’s failure. The company made the mistake of assuming its value proposition would speak for itself and that its supporters would take it upon themselves to carry Amazon’s water.

By the time the company began proactively mobilizing its supporters, the opposition had generated too much momentum to stop.

Developers need to go out into the communities where they want to build and engage local stakeholders early.

That doesn’t mean going in with a blank piece of paper and asking the community to create the plan. But it does mean starting a dialogue before a plan is set in stone, allowing for some flexibility and soliciting input with a willingness to incorporate it.

Give people skin in the game; something they can touch and that is “theirs.” This is the foundation for identifying and building an early base of support.

Once that is done, developers also must help ensure those voices are heard early and often; otherwise, they risk creating a vacuum that anti-development activists are skilled at filling. While the voices of those opponents rarely reflect the real sentiment on the ground, they will try to position themselves as indicative of the community.

If that narrative is allowed to take hold, particularly in the media, it is extremely difficult to change.

Amazon, for example, had the support of nearby NYCHA residents and 32BJ SEIU, two blocks that could have not only put tremendous pressure on officials to support the project but also sent a message to opponents to keep away. Instead, the company leveraged those relationships far too late.

Supporters need to plant their flags early, making it clear they represent their communities and intend to fight for these projects. And there is plenty of evidence they are willing to do that.

But communication is key, and it is incumbent on developers to take the first step in starting that dialogue.

— Tom Corsillo is a senior
vice president at Marino

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