Economy Watch: Amazon HQ2 to Drive Up Rents in Winner’s Market

Some markets will benefit more than others, but every location under consideration would be able to offer a rate hike—some as much as 2 percent.
Source: Apartment List Rentonomics, January 2018
Source: Apartment List Rentonomics, January 2018

Late last week, Amazon winnowed the prospective cities for its second headquarters down to 20. Apartment List, for its part, published an update of a its report from October, which predicts what an influx of 50,000 full-time Amazon workers and 66,250 supplementary workers would do to local housing markets. The revision added markets that weren’t considered the first time around, but which made the cut on Amazon’s list.

Overall, however, the answer is still the same: rents would go up in any market that gets the brass Amazon ring, but landlords in some markets will benefit more than others. 

Apartment Lists predicts an additional annual rent increase of as much as 2 percent per year on top of the rent growth those metros would experience without the Amazon HQ2. That would cost renter households up to $15,356 over the next 10 years.

The least impacted market would be New York City, where the company predicts rents would increase by an additional 0.1 percent to 0.2 percent per year with the Amazon HQ2. This is on top of baseline rent growth without Amazon, which averaged 3.7 percent per year from 2005 to 2015.

Likewise, the impact will be smaller in other metros with large housing stocks such as Washington, D.C., Los Angeles and Dallas, with additional annual rent growth projected at or below 0.5 percent a year.

By contrast, the revised report said, Raleigh, N.C., Columbus, Ohio, Indianapolis, Pittsburgh and Nashville will feel the rent increase the most, with additional annual rent growth between 1.2 percent and 2 percent. Raleigh might see the most growth, from 1.5 percent to 2 percent; between 2005 and 2015, that market’s annual average rent growth was 3.2 percent. Columbus’ increase would be nearly as much, from 1.3 percent to 1.7 percent. Between 2005 and 2015, Columbus rents were up 2.8 percent each year.