Not all markets will get a rent boost from Amazon's HQ2

by Steve Randall27 Apr 2018

Investors in residential real estate in select North American markets are hoping it will be their area that are in for an Amazon boost.

The online retailer announced in January that it had cut down the list of potential locations of its second North American headquarters, dubbed HQ2, to just 20.

But while being selected would bring a strong boost for rents in some cities, for others the benefits for landlords would be minimal.

An analysis from Zillow reveals that the estimated 50,000 jobs that HQ2 would bring, would mean the greatest boost to rents in Nashville, TN.

If new Amazon workers began moving to Nashville in a year from now, rents would rise by 2.4 percentage points more than the 1% Zillow estimates the market’s rents will rise if it is not selected for HQ2.

There would be a similar boost for Denver rents (2.3 percentage points higher) while LA would see a 1.9 percentage point rise in rents.

By contrast, Indianapolis-Carmel-Anderson, IN has an expected decrease in rents of 0.2% without HQ2, and no change in rents if it is selected.

Many of the finalist cities have a relatively strong record of adding new rental supply in response to new demand, helping curb rapid rent growth – though rents could escalate more quickly in communities with a smaller employment base and/or those unable or unwilling to add meaningful new housing supply,” said Zillow senior economist Aaron Terrazas.

“Growth often brings growing pains, and in the past it has been lower-income households that bore the brunt of rising housing costs in the face of rapid expansion. Whichever community is chosen, it's critical that local leaders begin working now to prepare their cities as best they can," he added.

 

Metro Name

Boost to Annual
Rent Appreciation
from Amazon HQ2
(percentage
points)

YoY Rent
Forecast
without
Amazon

Current
Median Rentiv

Median Rent in 2019 if
Amazon Moves In

Nashville-Davidson--Murfreesboro--Franklin, TN

2.4%

0.9%

$ 1,497

$ 1,547

Denver-Aurora-Lakewood, CO

2.3%

3.6%

$ 2,047

$ 2,168

Los Angeles-Long Beach-Anaheim, CA

1.9%

3.0%

$ 2,746

$ 2,880

Pittsburgh, PA

1.9%

-1.0%

$ 1,063

$ 1,072

Raleigh, NC

1.9%

2.4%

$ 1,436

$ 1,497

Miami-Fort Lauderdale-West Palm Beach, FL

1.7%

2.5%

$ 1,862

$ 1,940

Boston-Cambridge-Newton, MA-NH

1.4%

3.6%

$ 2,371

$ 2,490

Columbus, OH

1.3%

1.1%

$ 1,317

$ 1,349

Austin-Round Rock, TX

0.8%

0.7%

$ 1,686

$ 1,710

Dallas-Fort Worth-Arlington, TX

0.8%

2.3%

$ 1,606

$ 1,656

New York-Newark-Jersey City, NY-NJ-PA

0.8%

-1.0%

$ 2,401

$ 2,396

Washington-Arlington-Alexandria, DC-VA-MD-WV

0.6%

0.5%

$ 2,146

$ 2,170

Atlanta-Sandy Springs-Roswell, GA

0.4%

3.2%

$ 1,394

$ 1,445

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

0.4%

0.4%

$ 1,579

$ 1,592

Greater Toronto, ON

0.2%

1.4%

$1,031 (CAN$1,333)v

$1,047 (CAN$1,354)

Chicago-Naperville-Elgin, IL-IN-WI

0.1%

-0.2%

$ 1,653

$ 1,651

Indianapolis-Carmel-Anderson, IN

0.0%

-0.2%

$ 1,208

$ 1,206

 

 


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