Amazon’s New York HQ2 may give it dominion over financial services

(biz journals) Inc.'s potential move to Long Island City lays the foundation for the Seattle-based e-commerce giant to enter into — and dominate — the financial services sector, including real estate, wealth management and brokerage.  

That's according to real estate pro Janine Yorio, co-founder and CEO of Compound Asset Management, a New York City-based real estate technology company.

"I don't know for sure whether it will help or hurt the city, but it will certainly shake things up," she told me. "Amazon has mentioned a few times in the past that they're interested in getting into the banking and financial services industries, and [New York City] is the global financial services capital."

She's right. Amazon has been known to eat into bank revenues by making small-business loans, finding ways to cut into banks’ swipe-fee revenue, and competing against prepaid card issuers.

"I wouldn't be surprised if in five years, we all had some kind of Amazon payment platform on our phones through which we ran all of our banking, insurance and investment needs," Yorio added.

Amazon has already disrupted various other industries. The Jeff Bezos-led company bought upscale grocer Whole Foods Market for $13.7 billion, acquired PillPack as a means of breaking into the pharmaceutical space, and launched two home furnishing brands.

Yorio — who over the course of her career has managed more than $2 billion in structured real estate investments — also expects increased pressure on New York City's local businesses.

Yes, Amazon's 25,000 hires will boost revenue to the city with new commuters shuffling through local transportation hubs every day, as well as spending money throughout the neighborhood. But the additional employees will also be an additional burden to the already cluttered transit system. 

And what about other tech companies and startups?

  • PRO: "New York City will rival San Francisco as a good place for talented technologists to settle into," Yorio says.
  • CON: Tech talent will be even harder to recruit. "Amazon will be hiring tech talent, and this will only make it harder for smaller companies to recruit and hire tech talent in the NYC area," she added.

An Amazon presence in Long Island City also bolsters the profile of this small Queens enclave into something akin to some of Manhattan's busiest districts. But that doesn't necessarily mean hometown New Yorkers will be working there.

  • PRO: "It validates Long Island City as a bonafide business district of New York City, and creates a new commerce center in much the same way that Hudson Yards will do for the city's west side," Yorio said.
  • CON: New York City is very expensive, and while there is strong talent here, "the Amazon brand is strong enough to draw talent — through relocation — to whichever city it chose."

Both The Wall Street Journal and The New York Times reported this week that Amazon had switched its original strategy of picking one location for its 50,000-employee second headquarters to a plan of two locations with 25,000 employees each. Amazon is also considering Crystal City and Dallas as potential HQ2 sites.


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