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Some Amazon employees bought NYC condos before news of HQ2 location emerged

267 points by jakelazaroff 8y ago

HillaryBriss 8y ago
> The employees decided to buy units in a new 11-story condo building in the Long Island City neighborhood of Queens just before the first reports of Amazon’s HQ2 location were released this month... On the surface, these condo purchases seem suspicious. OTOH, there are thousands and thousands of Amazon employees, so, one might ask: how many condos in NYC do Amazon employees typically purchase per month? Is that number zero?
- Twirrim 8y ago
  Amazon already has offices and staff in New York, so it's perfectly possible the purchases were innocent. Whether they are or not is another matter.
- toomuchtodo 8y ago
  > On the surface, these condo purchases seem suspicious. Buying real estate ahead of such an announcement doesn't break any laws (edit: it might have violated employee agreements if Amazon has anything in there about acting on insider info, not an Amazon employee so I cannot comment on that). It's not as if this was a short dated deep out of the money call options play based on insider information (most definitely against the law; don't do this!).
  - metafizikal 8y ago
    I'm sure the SEC will find some way to call this insider trading, if they want. The mortgages are destined to be securitized!
    - rubbingalcohol 8y ago
      No, I don't think so. I understand why people are upset over Amazon's behavior with the new headquarters, but this article is scraping the bottom of the barrel for new headlines to stoke outrage over. There is literally nothing wrong with acting on insider information in a context outside of securities trading, which real estate is not.
      - georgeburdell 8y ago
        wrong != illegal. You statement should read "There is literally nothing illegal with acting on insider information in a context outside of securities trading, which real estate is not." Given how contentious housing is these days due to high prices, I'd argue that many would find buying real estate using insider information to be wrong.
  - jakelazaroff 8y ago
    Maybe not legally, but morally it's certainly equivalent to insider trading.
    - toomuchtodo 8y ago
      I don't even think it's a moral issue. If anything, these Amazon employees purchased before speculators could front run them. Working for Amazon is hard enough without generating fake outrage. Your concern should be with any elected official who offered Amazon concessions to locate in NYC. When their reelection comes up, it should be expressed that New Yorker's subsidized a trillion dollar company.
      - jakelazaroff 8y ago
        Believe me, that is a concern of mine as well :)
      - crispyambulance 8y ago
        > Your concern should be with any elected official who offered Amazon concessions to locate in NYC. Yes! In fact, all (or at least most) of the cities who "bidded" for the Amazon HQ2('s), did so by keeping the bid secret from their taxpayers. THAT is sketchy and vastly more harmful than a couple Amazon exec's getting a little greedy with condo real-estate.
    - wbl 8y ago
      Who is the victim here?
      - jakelazaroff 8y ago
        The previous owner of the condo?
        p0rkbelly 8y ago
        How does that make them a victim? They weren't forced to sell at any price. That's real estate and the article says they are net new construction. Also, Amazon has thousands of employees in NYC already. LIC is close to Midtown Manhattan, a few subway stops away and is a neighborhood full of new construction. It makes sense for any employees to buy there regardless of any situation...doesn't? Since when is "Buying a nice apartment in a desirable neighborhood near work" a suspicious or criminal thing? Geez.
  - HillaryBriss 8y ago
    yes. ok. "suspicious" is probably a bad choice of words. maybe just "curious" or "intriguing" would have been better. if the underlying implication ever actually proves true, then i have to wonder how these 2 employees even got that info ahead of time. i would have thought only Bezos and few top execs would have known this info before the announcement.
- deleted 8y ago
  [deleted]
- ptd 8y ago
  I’d also be curious as to how many condos were bought in the cities that did not “win”. I’d imagine it would be very hard to get that data though...
- paulgb 8y ago
  Long Island City is also an obvious choice for current residents along the L train who might be moving because of the upcoming L train closure. It's worth noting that LIC is only a ~20 minute commute with two train options (M & 7) to the current Amazon office, which is better even than the commute from parts of Manhattan. So I wonder if this is just part of a greater migration pattern from along the L to LIC/Astoria?
- Fiahil 8y ago
  And if they bought the condos with insider knowledge of the future location of Amazon HQ2, why would that be of any concern ? Why would it be fraudulent ?
  - lbriner 8y ago
    The laws exist to stop corruption where people "in the know" get to make loads of money from privileged information - the rich get richer etc. This example of housing is a similar issue but, of course, the question is whether it is illegal, which it seems is unlikely.
- tzs 8y ago
  It's not necessarily suspicious at all. They almost certainly are not going to staff the new offices entirely with new hires. Many people will be transferred in from other offices. That will include many to do the large amount of the work that needs to be done in New York before the new offices actually open. It is quite likely that these condo buyers are such people, moving to New York to work on opening the new offices and then to work at those offices. If it is only a small number of employees, there is no reason for them not to find housing in New York as soon as they can after finding out they are transferring.
dawhizkid 8y ago
What I'm curious about is whether LIC condo prices are really going to increase dramatically compared to similar projects in other parts of NYC? LIC is a major subway stop and well connected to the rest of NYC as is...you can live in Manhattan and get to LIC in 1-9 stops in < 30m. You could even live in Jersey City and get to LIC in 50m. It takes longer for some people living in outer neighborhoods of SF to get downtown than that!
- wgerard 8y ago
  I actually feel like what'll get much more expensive is Nassau county. LIC is right off the LIRR, and commuting from LI -> LIC is very doable. LIC is already basically full of luxury high-rises, so it's unclear to me that it'll get significantly more expensive. Of course, what the hell do I know about real estate.
  - princetontiger 8y ago
    totally agree. LIC has nothing. i dont think amazon will have a big impact in NYC. keep in mind, people are leaving the tri-state area for florida, texas, etc... there's A TON of supply.
- princetontiger 8y ago
  i think many people would want to live in manhattan. there is nothing in LIC. it's all in manhattan. 90% of NYC is manhattan. living near grand central and commuting over would be a great thing... heck, even getting a motorcycle and going under the queens tunnel every day wouldnt be bad either.
- jonknee 8y ago
  Probably more likely that nearby land that's within a decent bus ride of LIC will increase in value and higher density housing will be built there. The land that was right next to the existing subway stop was obviously already quite valuable.
- liftbigweights 8y ago
  > What I'm curious about is whether LIC condo prices are really going to increase dramatically compared to similar projects in other parts of NYC? It depends on whether NYC/NY will invest in it. People have talked about LIC being the next great thing for decades. I guess sooner or later, it will be LIC's turn. But I don't think AMZN is it. > you can live in Manhattan and get to LIC in 1-9 stops in < 30m. Nobody who lives in manhattan wants to work in LIC though. That's the problem. Manhattan is the work hub of the satellite regions like brooklyn, queens, hoboken, etc. These regions aren't work hubs for manhattan. > You could even live in Jersey City and get to LIC in 50m. Depends on the part of jersey city you live in. Most people aren't willing to switch trains to get to work. PATH to Metro twice a day? No thank you. If traffic warrants it, you could probably take the ferry directly from downtown JC to LIC.
siruncledrew 8y ago
Generally curious: Is there such a thing as "insider trading" for real estate purchases? For example, what if Bezos were to buy a ton of real estate in the DC area anticipating the value would go up after he announces Amazon will locate there, and he could effectively position himself as a "slumlord" of sorts for the surrounding real estate market?
- eqmvii 8y ago
  No. Insider trading (in the U.S.) is a specific crime based on federal securities law.
- karangoeluw 8y ago
  Do I have some news for you. https://www.washingtonpost.com/news/reliable-source/wp/2017/01/12/jeff-bezos-is-the-anonymous-buyer-of-the-biggest-house-in-washington/?noredirect=on&utm_term=.b919f58e187d https://www.washingtonpost.com/news/reliable-source/wp/2017/...
  - mjlee 8y ago
    I think it's more likely he simply chose to put HQ2 near his house rather than his house near where he planned to put HQ2.
    - gowld 8y ago
      Why? Likely he made both decisions together, since that's the obvious behavior.
- cm2187 8y ago
  Not a lawyer but I understand that insider dealing is defined and covered by securities laws and regulations. For instance I believe there is no such thing as insider dealing in the foreign exchange market.
  - kolbe 8y ago
    >that insider dealing is defined and covered by securities laws and regulations Correct. Now, if these employees had purchased mortgage backed securities, then it would be a different story.
mabbo 8y ago
The locations really weren't generally known internally. A few days before the announcement, there was a company-wide all-hands meeting with Jeff where we presumed we'd find out. Nada. Nothin'. No details. We were all left in the dark as much as anyone else. So the real question here is "which employees, and what did they know?". Or even better, will they be living in these condos for a few years, or selling them in 3 months?
- saiya-jin 8y ago
  Isn't in US some heavy taxation on capital gains from quick property sales to prevent this type of speculation? Ie in France it's progressively lowering after 5-6 years, it gets down to reasonable levels in I think 22 years. The result is much less volatility on the market.
  - ojbyrne 8y ago
    Short term capital gains are taxed at the same rate as ordinary income. Long term capital gains (greater than 1 year) get taxed at a lower rate.
    - djrogers 8y ago
      For homes, you need to have lived in the house as your primary residence for 2 of the past 5 years in order to qualify for long-term capital gains.
      - TomVDB 8y ago
        This is not true at all. You need to live there for 2 of the past 5 years to claim your $500k capital gains exclusion. Otherwise the normal short-term/long-term capital gains rules apply. https://www.thebalance.com/sale-of-your-home-3193496 https://www.thebalance.com/sale-of-your-home-3193496
  - deleted 8y ago
    [deleted]
  - 8y ago
sudovancity 8y ago
"While employees of companies are barred from buying or selling stocks based on information that has not yet been made public, lawyers told the Journal that they were unaware of any such ban affecting real estate transactions." This is exactly what I was wondering, I know there are rules against insider trading, but I wasn't sure if there were rules against people buying property based on a potential location for a new HQ.
- paulsutter 8y ago
  Amazon’s employment NDA surely prohibits employees from using company confidential information outside work, for example as a side business doing real estate investing
  - xsmasher 8y ago
    You are expected to USE confidential info. I don't think this counts as DISCLOSING confidential info.
    - refurb 8y ago
      My company requires employees to sign a document that they won’t use confidential company info for personal gain.
      - dsamarin 8y ago
        If we go down that rabbit hole, are you allowed to perform well in your job using confidential information in order to gain a promotion?
        refurb 8y ago
        The actual language specifies personal gain outside of work. That said, I don’t think they have any mechanism to enforce it.
      - majormajor 8y ago
liamcardenas 8y ago
Stuff like this seems like standard practice in the real estate industry (I am not an expert) For instance, I know one strategy called "land entitlement"[1]: Step 1) Find an area that has demand for a type of building or business that it is not zoned for. Step 2) Buy an option on a plot of land in that area. Step 3) Lobby the government to rezone that area / approve your project Step 4) Execute option and acquire land and a fraction of its new valuation This isn't directly analogous to the what happened in this instance, but essentially this is just a way for people with influence in local government to make money. Imagine if someone with connections to the FDA bought an option on a biotech stock and then convinced his friend, the commissioner, to help get their drug through the approval process. I'm pretty sure that would be illegal (or at least a gray area) -- but it's fair game in real estate. [1] https://cashflowconnections.com/land-entitlement-with-chris-tourtellotte/ https://cashflowconnections.com/land-entitlement-with-chris-...
- lbriner 8y ago
  This is different because it involves risk. You might lobby the government and they might reject your proposal. That doesn't make this illegal though - but there is a difference.
- ip26 8y ago
  I wonder if that would be considered graft? "reverse" graft?
- lifeisstillgood 8y ago
  i would not know where to begin with land options - is there a primer. it sounds like a thing designed for people with corrupt control over local councils
  - stass 8y ago
    You can write or buy an option on anything — it’s just a legal contract.
  - dmurray 8y ago
    The way I've heard this working is: you approach the landowner with a really good bid for his land ($5m for his property worth $4m). He agrees to sell, but you have trouble coming up with the money, and ask him if he can keep the offer open for a year or so. He isn't thrilled with this, but you offer him $250k up front, to be forfeited if you don't come up with the rest of the money. This makes the $250k look more like a token of good faith and less like an undervalued option, but it comes to the same thing.
p0rkbelly 8y ago
It says 2 employees bought a condo....in a neighborhood with probably the most amount of construction in NYC. How is this scandalous? People do buy real estate on their own...
- p0rkbelly 8y ago
  I looked it up and it appears Amazon's current office in NYC is in Midtown -- meaning 2 employees of several thousand -- bought a condo in a neighborhood just a couple of subway stops away. Probably because they couldn't afford to live in Manhattan! ARREST THEM! People shouldn't' be spending their paychecks on a home with a decent commute to work.
  - TrainedMonkey 8y ago
    This is scandalous! I am certain we can find a few people in every major company that would attest that this should be illegal.
- thoughtexplorer 8y ago
  Right. The only thing that's scandalous here is that the author didn't think of the most likely explanation. smh Hopefully they display journalistic integrity and update the story.
- nameless912 8y ago
  I'm usually an amazon hater (with a shiny amazon prime subscription...) but I agree with you, this is a stretch even by amazon hater standards.
- chiefalchemist 8y ago
  It was probably originally only one but in order to say employees (plural) they stretched a bit. It was, after all, only a one-person lie. No big deal. But a much different headline / title.
rhacker 8y ago
The profit from before this hit and after for a single condo could increase in value at least 100K easily. I still don't think that's an SEC worthy thing.
- dpark 8y ago
  Because it's "only" 100K or because private real estate transactions are not in the SEC's jurisdiction? The SEC definitely gets involved for less than 100K.
lbriner 8y ago
Wasn't the main scandal here the idea that local government was effectively paying money to one of the richest companies in the world? I wonder how many people lobbied their representatives to say that they didn't want their money spent on enticing a rich business into the area even if it might bring jobs.
jordache 8y ago
even if this was based on insider info, there are no laws preventing this..
carbocation 8y ago
To understand whether this is even anomalous, you need to know: - How many Amazon employees already live in NYC or are already planned for relocation there for non-HQ2 things. - The frequency at which a typical person around there buys new condos Without knowing those, it's hard to have priors, or to begin to decide whether this is a departure from those priors.
- p0rkbelly 8y ago
  Exactly. Plus, the neighborhood has Thousands of new apartments coming to the market already well before any sort of HQ2 search. Seems like A LOT of people are moving there. https://ny.curbed.com/maps/long-island-city-development-boom-construction-map https://ny.curbed.com/maps/long-island-city-development-boom...
- thoughtexplorer 8y ago
  Slow down there Critical Thinker. You can't consider such fundamental questions while creating clickbait.
  - hammock 8y ago
    How is this clickbait? Neither the headline not the article allege any anomaly or misdeeds. It's basic, factual reporting.
    - p0rkbelly 8y ago
      How is it not? There is definitely an implication...they even discuss the legality of it. Amazon employees have purchased hundreds of thousands of pieces of real estate over the years, how many articles were published discussing individual transactions? "Apple Employees buy a home in SJC before iPhone launch" "Goldman Sachs Employee buys home in TriBeCa during bonus season" is not something you read regularly.
      - deleted 8y ago
        [deleted]
mbesto 8y ago
Matt Levine talks about what is considered insider trading and what isn't. (scroll through each to the relevant headline) https://www.bloomberg.com/opinion/articles/2018-10-22/front-running-amazon-with-buildings https://www.bloomberg.com/opinion/articles/2018-10-22/front-... https://www.bloomberg.com/opinion/articles/2018-11-20/u-s-sanctions-hit-european-banks https://www.bloomberg.com/opinion/articles/2018-11-20/u-s-sa... https://www.bloomberg.com/opinion/articles/2018-11-21/now-you-can-foreclose-on-your-neighbor https://www.bloomberg.com/opinion/articles/2018-11-21/now-yo...
- savanaly 8y ago
  Most important tidbit in there is actually nothing to do with Amazon HQ2 but rather his recapitulation of a subtlety of insider trading which most people do not realize or necessarily share his perspective on: >Insider trading, I often say, is not about fairness; it’s about theft. There is no general prohibition on the use of material nonpublic information in stock trading, and in fact investors are supposed to find out new facts, and trade on them, so that prices can be more informative. Insider trading law is really about the misappropriation of nonpublic information that belongs to someone else — a corporate CEO using information that belongs to shareholders, or a therapist using information that belongs to her client — rather than the “level playing field” that prosecutors love to talk about.
  - matt4077 8y ago
    I think Matt Levine is rather excellent, a model for the sort of dialectic reasoning that's sorely missing. Yet I just don't get this argument of his. As far as I can tell, insider trading prohibitions are intended to protect the integrity of the market. That's why they are administered by the SEC. If you steal office supply, the SEC doesn't get involved. If you steal trade secrets to build an exact replica of <widget>, the SEC also has nothing to do with it. "Integrity of the market" in this case means that every investor can at least somewhat accurately estimate where they stand in the competition with other investors. That doesn't mean it's a completely level playing field; Large funds with the resources to send employees to every walmart and count the cars in the parking lot will always have an advantage. And that's not a bug but a feature, since it's the mechanism by which investors are rewarded for uncovering information. But those are what one might call "known unknowns". What could easily destroy the market are "unknown unknowns, the Deus Ex Machina taking all your money, with not even the theoretical chance to compete without leveraging insider information yourself. As an analogy, it's like a usual casino, where you know your expected value is slightly negative. And one where, with no predictability, the staff sometimes just takes all your chips and kicks you out. All that appears to me rather close to the concept of "fairness". Not for any moral considerations, but simply to avoid the inevitable death of an "unfair" market. (There's a fair (stolen?) chance that Matt Levine is right and I'm wrong. If you are looking for investment or legal advice, he is far more capable than me.) (I also think this very case somewhat supports the view above: Surely buying real estate ahead of the market is an opportunity that Amazon itself could have used profitably. Thus, it would appear to fit the definition of "theft of information that belongs to the company")
mancerayder 8y ago
Who cares? There's no shortage of condos for sale! In case anyone is deeply concerned about the moral implications (because there are 0 legal implications), there's actually a luxury condo glut in NYC right now. https://therealdeal.com/2018/08/19/condo-glut-is-to-blame-for-nycs-weakened-luxury-market/ https://therealdeal.com/2018/08/19/condo-glut-is-to-blame-fo...
peterwwillis 8y ago
The President of the United States has specifically stated that he favors doing trade deals with the leaders of nations who buy his real estate properties. If I had to measure, using myself for scale, how little of a shit I give about two nerds at an internet company buying condos where they may be working next, it would be at about bacterium-level.
- onemoresoop 8y ago
  What's the relevance with the President here? Is it in contrast with how little this is important to the president or you think the president profiting of his public office normalizes this type of behavior, which I don't see the link to very clearly?
  - peterwwillis 8y ago
    We should be seeing news articles about political cronyism, corruption and favoritism, more than we see articles about two people at Amazon buying condos. Maybe if they were buying the condos from a politician in exchange for favoritism would it be news-worthy
    - nil_pointer 8y ago
      Are you suggesting there isn't already a bunch of articles about the very example you gave?
Johnny555 8y ago
I think this only matters to Amazon internally -- if some employees had advance notice of the move and bought property before the rest of the company was informed, that's not fair to other employees.
- qaq 8y ago
  How? Maybe they are the employees that have to move to oversee construction or whatever other reason Amazon needs them there so they had advanced information. In any case Amazon is under no obligation to inform everyone about something like this.
qaq 8y ago
So? It's not illegal so what is the story here ?
sdinsn 8y ago
Sooo 2 employees, out of the tens of thousands that Amazon employs, bought a condo? Why is this news?
wolfpwner 8y ago
Insider property buying
ufmace 8y ago
I don't see anything about the timeline of these purchases, which seems like a critical detail to me. Most NYC purchases are 1 month+ affairs, and it's not unusual for it to stretch to 3 months or even longer. I'd like to know the date they initiated a property search, went on-contract, and closed the sale. If you wanted to be sure of closing before the official announcement, you'd have to start your search more like 6 months ahead of time. I doubt even Amazon itself was sure of the location that far in advance. Maybe they had already decided to move there with no knowledge of the HQ2 location at all? Or have they even closed on these properties? It's more plausible that they could learn the information, start a search, and get a purchase contract signed in a week or two if they were in a rush and not too picky. Then they would be fairly well guaranteed to be able to complete the purchase at a pre-announcement price. Assuming that the announcement does infact affect the price - this isn't that huge of a corporate move for the NYC market. But that also means that the purchases could fall through if there are legal questions about it.
Kaveren 8y ago
Just the notion that there could even be a ban about buying real estate based on insider information is insanity. Not every advantage needs to be legislated away. Same logic as CEOs hiding who they are when buying real estate sometimes; there's no moral obligation to inform the seller so they can drive up the price to make more money when they'd sell for their current one.
stakhanov 8y ago
What's scandalous about this is that there a journalists out there who would make a story out of this. Amazon has so many employees that "Some Amazon employees bought condos is location X in week Y" is probably a true statement for all X and all Y.
CodeSheikh 8y ago
My personal observation why Amazon was always going to move to LIC (New York City) and it has been decided if not years then months earlier: I live in NYC. I have a very good friend who moved to LIC in March this year. You have to understand that there is already abundance of construction going on in LIC for past few years, but not at an aggressive rate. But within a radius of three block where she lives (near FoodCellar market and Hayden something condos) construction peaked. I can count there are 7-8 aggressive construction going on this area alone. My understanding is clearly city leaked/shared this information with builders months in advance so that they can get a head start on these new condos. This area I am referring to is near One Court Sq (one of the buildings shortlisted for potential Amazon HQ). https://commercialobserver.com/2018/11/amazon-finalizes-plans-for-1m-square-feet-at-one-court-square-in-long-island-city/ https://commercialobserver.com/2018/11/amazon-finalizes-plan... https://www.google.com/maps/place/Citibank/@40.7472946,-73.9443305,15z/data=!4m2!3m1!1s0x0:0xbc1def18984f1fc9?ved=2ahUKEwi949j5wObeAhUGIDQIHf2MC78Q_BIwCnoECAIQCA https://www.google.com/maps/place/Citibank/@40.7472946,-73.9...
plandis 8y ago
Amazon already has offices in NYC. Is it really that perfidious that employees would buy in a new condo building close to the existing office?
rdlecler1 8y ago
I’m not sure that this is unfair at the individual level. If I’m an employee moving there I probably want to buy at the current price (which is still pretty hot) before speculators come in and bid it up and I can no longer accord to live there. Now if it was to buy and flip, I’d feel that this wouldn’t be right.
cauldron 8y ago
Maybe irrelevant but still interesting: more than 100 condos and over 100 mistresses, and literally tons of cash at home, a Chinese state company chief. https://www.caixinglobal.com/2018-10-17/fallen-chief-of-bad-asset-manager-had-tons-of-cash-literally-101335639.html https://www.caixinglobal.com/2018-10-17/fallen-chief-of-bad-...

267 points by jakelazaroff 8y ago

> The employees decided to buy units in a new 11-story condo building in the Long Island City neighborhood of Queens just before the first reports of Amazon’s HQ2 location were released this month... On the surface, these condo purchases seem suspicious. OTOH, there are thousands and thousands of Amazon employees, so, one might ask: how many condos in NYC do Amazon employees typically purchase per month? Is that number zero?

Twirrim 8y ago
Amazon already has offices and staff in New York, so it's perfectly possible the purchases were innocent. Whether they are or not is another matter.
toomuchtodo 8y ago
> On the surface, these condo purchases seem suspicious. Buying real estate ahead of such an announcement doesn't break any laws (edit: it might have violated employee agreements if Amazon has anything in there about acting on insider info, not an Amazon employee so I cannot comment on that). It's not as if this was a short dated deep out of the money call options play based on insider information (most definitely against the law; don't do this!).
- metafizikal 8y ago
  I'm sure the SEC will find some way to call this insider trading, if they want. The mortgages are destined to be securitized!
  - rubbingalcohol 8y ago
    No, I don't think so. I understand why people are upset over Amazon's behavior with the new headquarters, but this article is scraping the bottom of the barrel for new headlines to stoke outrage over. There is literally nothing wrong with acting on insider information in a context outside of securities trading, which real estate is not.
    - georgeburdell 8y ago
      wrong != illegal. You statement should read "There is literally nothing illegal with acting on insider information in a context outside of securities trading, which real estate is not." Given how contentious housing is these days due to high prices, I'd argue that many would find buying real estate using insider information to be wrong.
- jakelazaroff 8y ago
  Maybe not legally, but morally it's certainly equivalent to insider trading.
  - toomuchtodo 8y ago
    I don't even think it's a moral issue. If anything, these Amazon employees purchased before speculators could front run them. Working for Amazon is hard enough without generating fake outrage. Your concern should be with any elected official who offered Amazon concessions to locate in NYC. When their reelection comes up, it should be expressed that New Yorker's subsidized a trillion dollar company.
    - jakelazaroff 8y ago
      Believe me, that is a concern of mine as well :)
    - crispyambulance 8y ago
      > Your concern should be with any elected official who offered Amazon concessions to locate in NYC. Yes! In fact, all (or at least most) of the cities who "bidded" for the Amazon HQ2('s), did so by keeping the bid secret from their taxpayers. THAT is sketchy and vastly more harmful than a couple Amazon exec's getting a little greedy with condo real-estate.
  - wbl 8y ago
    Who is the victim here?
    - jakelazaroff 8y ago
      The previous owner of the condo?
      - p0rkbelly 8y ago
        How does that make them a victim? They weren't forced to sell at any price. That's real estate and the article says they are net new construction. Also, Amazon has thousands of employees in NYC already. LIC is close to Midtown Manhattan, a few subway stops away and is a neighborhood full of new construction. It makes sense for any employees to buy there regardless of any situation...doesn't? Since when is "Buying a nice apartment in a desirable neighborhood near work" a suspicious or criminal thing? Geez.
- HillaryBriss 8y ago
  yes. ok. "suspicious" is probably a bad choice of words. maybe just "curious" or "intriguing" would have been better. if the underlying implication ever actually proves true, then i have to wonder how these 2 employees even got that info ahead of time. i would have thought only Bezos and few top execs would have known this info before the announcement.
deleted 8y ago
[deleted]
ptd 8y ago
I’d also be curious as to how many condos were bought in the cities that did not “win”. I’d imagine it would be very hard to get that data though...
paulgb 8y ago
Long Island City is also an obvious choice for current residents along the L train who might be moving because of the upcoming L train closure. It's worth noting that LIC is only a ~20 minute commute with two train options (M & 7) to the current Amazon office, which is better even than the commute from parts of Manhattan. So I wonder if this is just part of a greater migration pattern from along the L to LIC/Astoria?
Fiahil 8y ago
And if they bought the condos with insider knowledge of the future location of Amazon HQ2, why would that be of any concern ? Why would it be fraudulent ?
- lbriner 8y ago
  The laws exist to stop corruption where people "in the know" get to make loads of money from privileged information - the rich get richer etc. This example of housing is a similar issue but, of course, the question is whether it is illegal, which it seems is unlikely.
tzs 8y ago
It's not necessarily suspicious at all. They almost certainly are not going to staff the new offices entirely with new hires. Many people will be transferred in from other offices. That will include many to do the large amount of the work that needs to be done in New York before the new offices actually open. It is quite likely that these condo buyers are such people, moving to New York to work on opening the new offices and then to work at those offices. If it is only a small number of employees, there is no reason for them not to find housing in New York as soon as they can after finding out they are transferring.

dawhizkid 8y ago

What I'm curious about is whether LIC condo prices are really going to increase dramatically compared to similar projects in other parts of NYC? LIC is a major subway stop and well connected to the rest of NYC as is...you can live in Manhattan and get to LIC in 1-9 stops in < 30m. You could even live in Jersey City and get to LIC in 50m. It takes longer for some people living in outer neighborhoods of SF to get downtown than that!

wgerard 8y ago
I actually feel like what'll get much more expensive is Nassau county. LIC is right off the LIRR, and commuting from LI -> LIC is very doable. LIC is already basically full of luxury high-rises, so it's unclear to me that it'll get significantly more expensive. Of course, what the hell do I know about real estate.
- princetontiger 8y ago
  totally agree. LIC has nothing. i dont think amazon will have a big impact in NYC. keep in mind, people are leaving the tri-state area for florida, texas, etc... there's A TON of supply.
princetontiger 8y ago
i think many people would want to live in manhattan. there is nothing in LIC. it's all in manhattan. 90% of NYC is manhattan. living near grand central and commuting over would be a great thing... heck, even getting a motorcycle and going under the queens tunnel every day wouldnt be bad either.
jonknee 8y ago
Probably more likely that nearby land that's within a decent bus ride of LIC will increase in value and higher density housing will be built there. The land that was right next to the existing subway stop was obviously already quite valuable.
liftbigweights 8y ago
> What I'm curious about is whether LIC condo prices are really going to increase dramatically compared to similar projects in other parts of NYC? It depends on whether NYC/NY will invest in it. People have talked about LIC being the next great thing for decades. I guess sooner or later, it will be LIC's turn. But I don't think AMZN is it. > you can live in Manhattan and get to LIC in 1-9 stops in < 30m. Nobody who lives in manhattan wants to work in LIC though. That's the problem. Manhattan is the work hub of the satellite regions like brooklyn, queens, hoboken, etc. These regions aren't work hubs for manhattan. > You could even live in Jersey City and get to LIC in 50m. Depends on the part of jersey city you live in. Most people aren't willing to switch trains to get to work. PATH to Metro twice a day? No thank you. If traffic warrants it, you could probably take the ferry directly from downtown JC to LIC.

siruncledrew 8y ago

Generally curious: Is there such a thing as "insider trading" for real estate purchases? For example, what if Bezos were to buy a ton of real estate in the DC area anticipating the value would go up after he announces Amazon will locate there, and he could effectively position himself as a "slumlord" of sorts for the surrounding real estate market?

eqmvii 8y ago
No. Insider trading (in the U.S.) is a specific crime based on federal securities law.
karangoeluw 8y ago
Do I have some news for you. https://www.washingtonpost.com/news/reliable-source/wp/2017/01/12/jeff-bezos-is-the-anonymous-buyer-of-the-biggest-house-in-washington/?noredirect=on&utm_term=.b919f58e187d https://www.washingtonpost.com/news/reliable-source/wp/2017/...
- mjlee 8y ago
  I think it's more likely he simply chose to put HQ2 near his house rather than his house near where he planned to put HQ2.
  - gowld 8y ago
    Why? Likely he made both decisions together, since that's the obvious behavior.
cm2187 8y ago
Not a lawyer but I understand that insider dealing is defined and covered by securities laws and regulations. For instance I believe there is no such thing as insider dealing in the foreign exchange market.
- kolbe 8y ago
  >that insider dealing is defined and covered by securities laws and regulations Correct. Now, if these employees had purchased mortgage backed securities, then it would be a different story.

mabbo 8y ago

The locations really weren't generally known internally. A few days before the announcement, there was a company-wide all-hands meeting with Jeff where we presumed we'd find out. Nada. Nothin'. No details. We were all left in the dark as much as anyone else. So the real question here is "which employees, and what did they know?". Or even better, will they be living in these condos for a few years, or selling them in 3 months?

saiya-jin 8y ago
Isn't in US some heavy taxation on capital gains from quick property sales to prevent this type of speculation? Ie in France it's progressively lowering after 5-6 years, it gets down to reasonable levels in I think 22 years. The result is much less volatility on the market.
- ojbyrne 8y ago
  Short term capital gains are taxed at the same rate as ordinary income. Long term capital gains (greater than 1 year) get taxed at a lower rate.
  - djrogers 8y ago
    For homes, you need to have lived in the house as your primary residence for 2 of the past 5 years in order to qualify for long-term capital gains.
    - TomVDB 8y ago
      This is not true at all. You need to live there for 2 of the past 5 years to claim your $500k capital gains exclusion. Otherwise the normal short-term/long-term capital gains rules apply. https://www.thebalance.com/sale-of-your-home-3193496 https://www.thebalance.com/sale-of-your-home-3193496
- deleted 8y ago
  [deleted]
- 8y ago

sudovancity 8y ago

"While employees of companies are barred from buying or selling stocks based on information that has not yet been made public, lawyers told the Journal that they were unaware of any such ban affecting real estate transactions." This is exactly what I was wondering, I know there are rules against insider trading, but I wasn't sure if there were rules against people buying property based on a potential location for a new HQ.

paulsutter 8y ago
Amazon’s employment NDA surely prohibits employees from using company confidential information outside work, for example as a side business doing real estate investing
- xsmasher 8y ago
  You are expected to USE confidential info. I don't think this counts as DISCLOSING confidential info.
  - refurb 8y ago
    My company requires employees to sign a document that they won’t use confidential company info for personal gain.
    - dsamarin 8y ago
      If we go down that rabbit hole, are you allowed to perform well in your job using confidential information in order to gain a promotion?
      - refurb 8y ago
        The actual language specifies personal gain outside of work. That said, I don’t think they have any mechanism to enforce it.
    - majormajor 8y ago

liamcardenas 8y ago

Stuff like this seems like standard practice in the real estate industry (I am not an expert) For instance, I know one strategy called "land entitlement"[1]: Step 1) Find an area that has demand for a type of building or business that it is not zoned for. Step 2) Buy an option on a plot of land in that area. Step 3) Lobby the government to rezone that area / approve your project Step 4) Execute option and acquire land and a fraction of its new valuation This isn't directly analogous to the what happened in this instance, but essentially this is just a way for people with influence in local government to make money. Imagine if someone with connections to the FDA bought an option on a biotech stock and then convinced his friend, the commissioner, to help get their drug through the approval process. I'm pretty sure that would be illegal (or at least a gray area) -- but it's fair game in real estate. [1] https://cashflowconnections.com/land-entitlement-with-chris-tourtellotte/ https://cashflowconnections.com/land-entitlement-with-chris-...

lbriner 8y ago
This is different because it involves risk. You might lobby the government and they might reject your proposal. That doesn't make this illegal though - but there is a difference.
ip26 8y ago
I wonder if that would be considered graft? "reverse" graft?
lifeisstillgood 8y ago
i would not know where to begin with land options - is there a primer. it sounds like a thing designed for people with corrupt control over local councils
- stass 8y ago
  You can write or buy an option on anything — it’s just a legal contract.
- dmurray 8y ago
  The way I've heard this working is: you approach the landowner with a really good bid for his land ($5m for his property worth $4m). He agrees to sell, but you have trouble coming up with the money, and ask him if he can keep the offer open for a year or so. He isn't thrilled with this, but you offer him $250k up front, to be forfeited if you don't come up with the rest of the money. This makes the $250k look more like a token of good faith and less like an undervalued option, but it comes to the same thing.

p0rkbelly 8y ago

It says 2 employees bought a condo....in a neighborhood with probably the most amount of construction in NYC. How is this scandalous? People do buy real estate on their own...

p0rkbelly 8y ago
I looked it up and it appears Amazon's current office in NYC is in Midtown -- meaning 2 employees of several thousand -- bought a condo in a neighborhood just a couple of subway stops away. Probably because they couldn't afford to live in Manhattan! ARREST THEM! People shouldn't' be spending their paychecks on a home with a decent commute to work.
- TrainedMonkey 8y ago
  This is scandalous! I am certain we can find a few people in every major company that would attest that this should be illegal.
thoughtexplorer 8y ago
Right. The only thing that's scandalous here is that the author didn't think of the most likely explanation. smh Hopefully they display journalistic integrity and update the story.
nameless912 8y ago
I'm usually an amazon hater (with a shiny amazon prime subscription...) but I agree with you, this is a stretch even by amazon hater standards.
chiefalchemist 8y ago
It was probably originally only one but in order to say employees (plural) they stretched a bit. It was, after all, only a one-person lie. No big deal. But a much different headline / title.

rhacker 8y ago

The profit from before this hit and after for a single condo could increase in value at least 100K easily. I still don't think that's an SEC worthy thing.

dpark 8y ago
Because it's "only" 100K or because private real estate transactions are not in the SEC's jurisdiction? The SEC definitely gets involved for less than 100K.

lbriner 8y ago

Wasn't the main scandal here the idea that local government was effectively paying money to one of the richest companies in the world? I wonder how many people lobbied their representatives to say that they didn't want their money spent on enticing a rich business into the area even if it might bring jobs.

jordache 8y ago

even if this was based on insider info, there are no laws preventing this..

carbocation 8y ago

To understand whether this is even anomalous, you need to know: - How many Amazon employees already live in NYC or are already planned for relocation there for non-HQ2 things. - The frequency at which a typical person around there buys new condos Without knowing those, it's hard to have priors, or to begin to decide whether this is a departure from those priors.

p0rkbelly 8y ago
Exactly. Plus, the neighborhood has Thousands of new apartments coming to the market already well before any sort of HQ2 search. Seems like A LOT of people are moving there. https://ny.curbed.com/maps/long-island-city-development-boom-construction-map https://ny.curbed.com/maps/long-island-city-development-boom...
thoughtexplorer 8y ago
Slow down there Critical Thinker. You can't consider such fundamental questions while creating clickbait.
- hammock 8y ago
  How is this clickbait? Neither the headline not the article allege any anomaly or misdeeds. It's basic, factual reporting.
  - p0rkbelly 8y ago
    How is it not? There is definitely an implication...they even discuss the legality of it. Amazon employees have purchased hundreds of thousands of pieces of real estate over the years, how many articles were published discussing individual transactions? "Apple Employees buy a home in SJC before iPhone launch" "Goldman Sachs Employee buys home in TriBeCa during bonus season" is not something you read regularly.
    - deleted 8y ago
      [deleted]

mbesto 8y ago

Matt Levine talks about what is considered insider trading and what isn't. (scroll through each to the relevant headline) https://www.bloomberg.com/opinion/articles/2018-10-22/front-running-amazon-with-buildings https://www.bloomberg.com/opinion/articles/2018-10-22/front-... https://www.bloomberg.com/opinion/articles/2018-11-20/u-s-sanctions-hit-european-banks https://www.bloomberg.com/opinion/articles/2018-11-20/u-s-sa... https://www.bloomberg.com/opinion/articles/2018-11-21/now-you-can-foreclose-on-your-neighbor https://www.bloomberg.com/opinion/articles/2018-11-21/now-yo...

savanaly 8y ago
Most important tidbit in there is actually nothing to do with Amazon HQ2 but rather his recapitulation of a subtlety of insider trading which most people do not realize or necessarily share his perspective on: >Insider trading, I often say, is not about fairness; it’s about theft. There is no general prohibition on the use of material nonpublic information in stock trading, and in fact investors are supposed to find out new facts, and trade on them, so that prices can be more informative. Insider trading law is really about the misappropriation of nonpublic information that belongs to someone else — a corporate CEO using information that belongs to shareholders, or a therapist using information that belongs to her client — rather than the “level playing field” that prosecutors love to talk about.
- matt4077 8y ago
  I think Matt Levine is rather excellent, a model for the sort of dialectic reasoning that's sorely missing. Yet I just don't get this argument of his. As far as I can tell, insider trading prohibitions are intended to protect the integrity of the market. That's why they are administered by the SEC. If you steal office supply, the SEC doesn't get involved. If you steal trade secrets to build an exact replica of <widget>, the SEC also has nothing to do with it. "Integrity of the market" in this case means that every investor can at least somewhat accurately estimate where they stand in the competition with other investors. That doesn't mean it's a completely level playing field; Large funds with the resources to send employees to every walmart and count the cars in the parking lot will always have an advantage. And that's not a bug but a feature, since it's the mechanism by which investors are rewarded for uncovering information. But those are what one might call "known unknowns". What could easily destroy the market are "unknown unknowns, the Deus Ex Machina taking all your money, with not even the theoretical chance to compete without leveraging insider information yourself. As an analogy, it's like a usual casino, where you know your expected value is slightly negative. And one where, with no predictability, the staff sometimes just takes all your chips and kicks you out. All that appears to me rather close to the concept of "fairness". Not for any moral considerations, but simply to avoid the inevitable death of an "unfair" market. (There's a fair (stolen?) chance that Matt Levine is right and I'm wrong. If you are looking for investment or legal advice, he is far more capable than me.) (I also think this very case somewhat supports the view above: Surely buying real estate ahead of the market is an opportunity that Amazon itself could have used profitably. Thus, it would appear to fit the definition of "theft of information that belongs to the company")

mancerayder 8y ago

Who cares? There's no shortage of condos for sale! In case anyone is deeply concerned about the moral implications (because there are 0 legal implications), there's actually a luxury condo glut in NYC right now. https://therealdeal.com/2018/08/19/condo-glut-is-to-blame-for-nycs-weakened-luxury-market/ https://therealdeal.com/2018/08/19/condo-glut-is-to-blame-fo...

peterwwillis 8y ago

The President of the United States has specifically stated that he favors doing trade deals with the leaders of nations who buy his real estate properties. If I had to measure, using myself for scale, how little of a shit I give about two nerds at an internet company buying condos where they may be working next, it would be at about bacterium-level.

onemoresoop 8y ago
What's the relevance with the President here? Is it in contrast with how little this is important to the president or you think the president profiting of his public office normalizes this type of behavior, which I don't see the link to very clearly?
- peterwwillis 8y ago
  We should be seeing news articles about political cronyism, corruption and favoritism, more than we see articles about two people at Amazon buying condos. Maybe if they were buying the condos from a politician in exchange for favoritism would it be news-worthy
  - nil_pointer 8y ago
    Are you suggesting there isn't already a bunch of articles about the very example you gave?

Johnny555 8y ago

I think this only matters to Amazon internally -- if some employees had advance notice of the move and bought property before the rest of the company was informed, that's not fair to other employees.

qaq 8y ago
How? Maybe they are the employees that have to move to oversee construction or whatever other reason Amazon needs them there so they had advanced information. In any case Amazon is under no obligation to inform everyone about something like this.

qaq 8y ago

So? It's not illegal so what is the story here ?

sdinsn 8y ago

Sooo 2 employees, out of the tens of thousands that Amazon employs, bought a condo? Why is this news?

wolfpwner 8y ago

Insider property buying

ufmace 8y ago

I don't see anything about the timeline of these purchases, which seems like a critical detail to me. Most NYC purchases are 1 month+ affairs, and it's not unusual for it to stretch to 3 months or even longer. I'd like to know the date they initiated a property search, went on-contract, and closed the sale. If you wanted to be sure of closing before the official announcement, you'd have to start your search more like 6 months ahead of time. I doubt even Amazon itself was sure of the location that far in advance. Maybe they had already decided to move there with no knowledge of the HQ2 location at all? Or have they even closed on these properties? It's more plausible that they could learn the information, start a search, and get a purchase contract signed in a week or two if they were in a rush and not too picky. Then they would be fairly well guaranteed to be able to complete the purchase at a pre-announcement price. Assuming that the announcement does infact affect the price - this isn't that huge of a corporate move for the NYC market. But that also means that the purchases could fall through if there are legal questions about it.

Kaveren 8y ago

Just the notion that there could even be a ban about buying real estate based on insider information is insanity. Not every advantage needs to be legislated away. Same logic as CEOs hiding who they are when buying real estate sometimes; there's no moral obligation to inform the seller so they can drive up the price to make more money when they'd sell for their current one.

stakhanov 8y ago

What's scandalous about this is that there a journalists out there who would make a story out of this. Amazon has so many employees that "Some Amazon employees bought condos is location X in week Y" is probably a true statement for all X and all Y.

CodeSheikh 8y ago

My personal observation why Amazon was always going to move to LIC (New York City) and it has been decided if not years then months earlier: I live in NYC. I have a very good friend who moved to LIC in March this year. You have to understand that there is already abundance of construction going on in LIC for past few years, but not at an aggressive rate. But within a radius of three block where she lives (near FoodCellar market and Hayden something condos) construction peaked. I can count there are 7-8 aggressive construction going on this area alone. My understanding is clearly city leaked/shared this information with builders months in advance so that they can get a head start on these new condos. This area I am referring to is near One Court Sq (one of the buildings shortlisted for potential Amazon HQ). https://commercialobserver.com/2018/11/amazon-finalizes-plans-for-1m-square-feet-at-one-court-square-in-long-island-city/ https://commercialobserver.com/2018/11/amazon-finalizes-plan... https://www.google.com/maps/place/Citibank/@40.7472946,-73.9443305,15z/data=!4m2!3m1!1s0x0:0xbc1def18984f1fc9?ved=2ahUKEwi949j5wObeAhUGIDQIHf2MC78Q_BIwCnoECAIQCA https://www.google.com/maps/place/Citibank/@40.7472946,-73.9...

plandis 8y ago

Amazon already has offices in NYC. Is it really that perfidious that employees would buy in a new condo building close to the existing office?

rdlecler1 8y ago

I’m not sure that this is unfair at the individual level. If I’m an employee moving there I probably want to buy at the current price (which is still pretty hot) before speculators come in and bid it up and I can no longer accord to live there. Now if it was to buy and flip, I’d feel that this wouldn’t be right.

cauldron 8y ago

Maybe irrelevant but still interesting: more than 100 condos and over 100 mistresses, and literally tons of cash at home, a Chinese state company chief. https://www.caixinglobal.com/2018-10-17/fallen-chief-of-bad-asset-manager-had-tons-of-cash-literally-101335639.html https://www.caixinglobal.com/2018-10-17/fallen-chief-of-bad-...