Three Ways Amazon’s HQ2 Will Transform Dining in NYC and DC

It’s official: Amazon plans to split its second headquarters between D.C. and New York City, major hubs with thriving dining scenes. Both urban centers are certainly capable of feeding an additional 25,000 consumers, but the influx of mostly young, technically skilled, highly paid, mostly male workers will want specific types of dining options: Workers need to be lured from their comfortable campus with its complimentary dining services — the tech company’s CEO Jeff “Bezos famously devises lures to keep employees at toil,” Seattle magazine noted last year. Similar to college students, “[t]hey want cheap, and they travel in packs,” Seattle-based chef and restaurateur Tom Douglas told the Wall Street Journal of the Amazon staffers that fill his restaurants.

In Virginia, Amazon’s new HQ will occupy office space in Crystal City, a commercial area just south of D.C. proper with around 22,000 residents; in New York, Amazon will move into Long Island City, which is home to around 80,000 residents. In addition, the Seattle-based company will create 5,000 jobs in Nashville related to supply-chain, transportation, and logistics.

As their respective city and state governments work out how to adapt existing infrastructure in order to meet the demands of an increasing population, here are three main ways Amazon’s HQ2 will change the urban dining landscapes in D.C. and NYC.

1. A restaurant boom

More space for more restaurants

At both locations, “you’re gonna see an influx of new restaurants,” says Dennis Gemberling of Perry Group, a SF-based hospitality consultancy. In Seattle, as Amazon’s workforce ballooned to 45,000 over the past 10 years, the number of restaurants in the vicinity increased by 27 percent, according to information obtained by the WSJ.

JACX, a new 50,000-square-foot retail development under construction in Long Island City will house at least one full-service restaurant as well as a food hall and “gourmet market.” A new development at Hunter’s Point South will also bring new restaurants and cafes to the neighborhood, and people are signing leases on apartments and buying condos seemingly faster than developers can build them.

ThinkFoodGroup, one of the biggest restaurant operators in D.C., declined to comment on plans to increase its footprint in the area, but Maryland-based developer JBG SMITH, which works with ThinkFoodGroup, confirmed that it will be building 500,000 square feet of commercial and residential space in Crystal City over the next two years, with at least half it already leased to Amazon. Around 150,000 square feet will be dedicated to retail and restaurant space. An Alamo Drafthouse is on the way, as well as at least two other full-service restaurants.

Chef-driven concepts

Chef Dan Kluger of Manhattan’s Loring Place announced plans this week to open a new restaurant in LIC; in D.C., chef José Andrés already operates a large location of his Jaleo concept, a full-service tapas restaurant, in Crystal City.

Bezos is rumored to have a history of hand-picking chefs and restaurants he likes for his offices. Amazon’s Seattle campus houses restaurants from some of Seattle’s most notable chefs, including James Beard Award-winner Renee Erickson.

Lunch and delivery

“In terms of the big picture... certainly, grab and go [concepts], the casual, advanced casual concepts... will probably benefit the most,” Gemberling says, mentioning Panera by name. Office workers will likely be drawn to places “where you can go in and get a reasonably full meal, but quickly and inexpensively,”

Restaurant owners in Long Island City believe the new residents will increase their daytime business. “In the morning, you just see a whole exodus of people leaving for Manhattan,” Robert Briskin, a partner at three-year-old Italian restaurant Maiella, told Eater NY. The neighborhood itself “doesn’t exist until 5 p.m.” To accommodate the larger lunch crowd, Briskin plans to hire additional staff and introduce a lunch menu by the end of 2019.

Shake Shack is rumored to be opening soon in LIC, but for other fast-casual startups that already cater to office lunch crowds in areas like Midtown Manhattan and Georgetown, Gemberling has a word of warning. “Amazon staffers, and any new residents in the area, are going to be demanding delivery, and restaurants will just have to weigh the pros and cons,” he says. “On the one hand, it’s an increase in the cost of doing business, if you’re paying Uber Eats to deliver each meal, but on the other, it meets the demands of the diner, so sales will increase, offsetting the cost.”

Gemberling also sees an opportunity for food truck operators, since real estate is going to be tight and Amazon has been known to host food truck fairs on its campus. “At some locations, they invite the food trucks to come in and basically set up shop in the parking lot over lunch hour or break times... if I were a food truck operator, I would definitely jump on the scene. It may be a real opportunity for expansion.”

Drew Angerer/Getty Images

2. But that growth will come with some drawbacks, including higher rents and menu prices

For restaurants that want to get in on the action as developers build new commercial space, rent is going to skyrocket. “From chains to mom and pops to boutiques, because the demand is going to be there now,” Gemberling says, “it’s now going to be a fight over real estate.” Demand is already up, and some say the new costs of doing business might not make moving into the neighborhood worth it.

In Long Island City, the owners of Gordo’s Cantina told Eater NY that they’ve been looking for a new space in the neighborhood, since their current lease runs out in 2020. Landlords have already started asking for “triple” what they’re paying now, co-owner Paulina Grigonis says. “If before we weren’t able to find or raise the money to move to a larger space in LIC,” Grigonis says, “then now it’s probably going to be harder because things are going to be more expensive.”

That’s going to lead to higher menu prices. A cursory review of lunch prices at popular restaurants in Crystal City shows an average price of around $10 to $15 per person, excluding beverages. But near Amazon’s HQ in Seattle, the price of lunch can easily climb to between $14 and $17 per person, according to Seattle-based food writer Jessica Voelker.

Additionally, restaurants near Seattle’s HQ say they’ve struggled to attract diners at dinner or on weekends, and haven’t seen the happy hour business they expected. Perhaps this is in part because Amazon hosts its own in-office happy hours each week. That, ultimately, would cut into their expected bottom lines.

3. The cost of living for restaurant workers is going to climb

In both communities, rent for existing housing is rising right alongside commercial space. It’s not just the new Amazon employees that will drive up demand and rents for their existing neighbors — it’s also speculation. “In the short term, you will see people coming in and — now that it’s official — wanting to take advantage of the situation,” Daren Blomquist, senior vice president at Attom Data Solutions, a real estate data company based in Irvine, California, told the Washington Business Journal. Some property owners are already suggesting they’ll only sell to all-cash buyers.

Restaurant employees are already among the lowest paid workers in the country, so they’ve long commuted to their jobs from areas just outside city centers — areas like Long Island City and Crystal City. If rents rise in NY and D.C., as is expected, it could exacerbate the labor shortage some hospitality groups say they’re currently facing, by forcing restaurant workers further out of the city.

In New York City, where real estate is already astronomically expensive, LIC’s home borough of Queens was always more affordable. Amazon’s move, according to one of its newest Congresswomen, is “extremely concerning.”

“We’ve been getting calls and outreach from Queens residents...” Alexandria Ocasio-Cortez tweeted the day the news was confirmed. “The community’s response? Outrage.”

The property boom has already begun, according to the WSJ, but New York City’s Regional Plan Association, an independent urban planning and advisory committee servicing the tri-state area, wants to pump the brakes. The group urges the city to ensure the deal is “a win-win for the company and community,” its statement reads. “The City and State must hold the company accountable for being a part of the solution to create better infrastructure to accommodate the rapid influx of over 25,000 workers.”