Economy Watch: HQ2 Could Raise Rents in Some Apartment Markets

Smaller metros with lower wage growth or constrained housing stocks could see rents rise the most from the Amazon HQ2, notes a new Apartment List report.
Source: Apartment List, Rentonomics
Source: Apartment List, Rentonomics

Bids to be the home of Amazon’s second headquarters, HQ2, were due on Thursday, and more than 50 cities (or metros with various polities collaborating) put in for what’s probably the biggest site selection prize of the 2010s. Now it’s up to the retail giant, which will announce the winner sometime in 2018.

Apartment List recently published a report, involving the 15 likely top contenders for the prize, detailing what an influx of Amazon workers (as many as 50,000 over 10 years, plus more supplementary workers) would mean for local apartment markets. Mainly, it would increase rents up to an additional 2 percent  per year in the metro selected for the Amazon HQ2. That would be on top of baseline rent growth without Amazon, which averaged 3.1 percent per year nationwide from 2005 to 2015.

Smaller metros with lower wages or severely constrained housing stocks, such as Raleigh, Pittsburgh, Baltimore, and San Jose, stand to see rents rise the most from the Amazon HQ2. Conversely, metros with large housing stocks, like Los Angeles and Dallas, would see less severe impacts, with rent prices expected to rise 0.5 percent or less a year.

Amazon said it’s looking for a large metropolitan area with strong job growth, an educated labor pool, proximity to universities, relatively affordable housing and a strong transportation system. Apartment List analyzed data from the Census Bureau and the Bureau of Labor Statistics to determine how much new housing a metro can build, the amount of slack in the housing market, and the impact of an influx of high-wage workers.