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Experts tell real estate speculators to position themselves well.
The company is reportedly in the final phase of talks with the communities of Crystal City, Virginia, right next to Washington, DC, and Long Island City, New York, to build its second headquarters, the Wall Street Journal reported Monday. . The company's current headquarters are in Seattle, Washington. (According to some reports, Dallas is also still racing.)
Amazon announced that its second headquarters, HQ2, would employ more than 50,000 people and generate more than $ 5 billion in economic investments over 20 years, and that potential HQ2 sites would strive to seduce Amazon . (Amazon declined to comment on this story.)
Marc Cenedella, President and CEO of Ladders Career Website, said New York City and Northern Virginia were two of the best places for talent. Amazon employees generally fall into two categories: low-wage warehouse employees and high-paying "knowledge workers." The jobs in these two QG2s should belong to this last category.
"What they built in Seattle took 20 years and it will be difficult to replicate that size and the size of the technological workforce in a city," he said. "Divide that seems like a rational decision."
Will these cities attract workers?
A PayScale analysis ranked northern Virginia and New York City as the second and third best locations for QG2 in terms of skilled talent concentration, surpassed only by Boston. The metropolitan areas of New York and Washington already have booming technology sectors, giving Amazon a pool of talent to recruit, said Aaron Terrazas, senior economist at Zillow.
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An analysis ranked Northern Virginia and New York City as the second and third best locations for QG2 for skilled talent, only surpassed by Boston.
Both are at home to big business. Mars Inc., Capital One
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and Northrop Grumman
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are among the many companies that live in Northern Virginia. JetBlue
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meanwhile, has its headquarters in Long Island City.
They are also full of vacancies in commercial real estate. The city of Long Island, in particular, has experienced a revitalization in recent decades and large waterfront warehouses have been redeveloped into office parks.
Earlier this year, Citigroup
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has left One Court Square in Long Island City, New York's tallest skyscraper, outside of Manhattan, opening up a million-square-foot office space. Quoting sources, Crain's New York reported that Amazon was considering this building for its Long Island City outpost.
The move is likely to draw hundreds of thousands of workers to selected cities, including people who do not work with Amazon, but work in ancillary businesses and startups that appear around Amazon, said Katie Bardaro, Vice President of Data Analysis at PayScale, a data processing and software company.
Will house prices go up in the cities of QG2?
Experts say housing prices and rents are likely to rise, especially near the new QG2, but it will not be sudden, and some owners in Long Island City and Crystal City may not see much growth. . "A sudden influx of well-paid workers can be a good thing, but can also have negative effects on local economies," said Bardaro. "People who want to live close to their place of work could pay the price of those who already live there."
The "Amazon" effect on housing prices could be tempered, given that QG2 would be divided between the two developed metropolitan areas.
But the impact on housing prices could be less severe in New York and Washington, DC than it would have been elsewhere. A study of the Apartment Apartment real estate website predicted that rents would rise by less than 0.5% in both cities if they won the bid auction for Amazon HQ2.
Everything is relative, of course. The value of homes in New York has already climbed 42.5% over the past five years, while prices in Arlington County, Virginia, have increased by 15.5%. Home values in Seattle increased 73% over this period.
In New York, a recent series of new luxury apartment complexes has led to lower prices in the high-end segment of the rental market, due to the higher number of vacancies. Long Island City and Queens, however, were far from this trend.
In addition, the "Amazon effect" could be even smaller since the headquarters would be divided between the two cities.
What will happen to rents near Amazon?
Rents are already rising in the two metropolitan areas that are rumored to be Amazon's choice. The northwestern Queens area, which includes Long Island City, Astoria, Sunnyside and Woodside, has the highest average rent in the borough, with $ 3,095 a month, according to data from real estate company Douglas Elliman . Rents rose 3.8% over the past year, compared to 1.8% in Manhattan and 0.2% in Brooklyn.
Both locations are easily accessible by commuters. This allows HQ2 employees to more easily consider living somewhere.
A similar situation occurred in the Washington metropolitan area. Arlington is a desirable area and has seen rent growth of nearly 3% over the past year. The median rent is $ 2,080 per month. In comparison, the median rent rose only 0.6% year-on-year in the Greater Washington area, which is below the national average of 1.1%, according to Apartment List.
Both locations are easily accessible by commuters. This allows Amazon HQ2 employees to more easily consider living somewhere. (In comparison, the lack of transportation infrastructure in Seattle has made life closer to the current Amazon headquarters, Southlake Union, and therefore, more expensive, Terrazas said.)
Crystal City is serviced by the blue and yellow Washington metro lines and the Metroway high-speed bus line. Long Island City is served by eight different subway lines that can take passengers to the Pennsylvania Station and Grand Central Station, two major centers. The Queens district is also accessible by suburban train and ferry. Both cities are also close to major highways.
"They are just outside the city center," Terrazas said. "It makes these places even more accessible to young city dwellers and people who prefer to live in the suburbs."
Seattle has been slow to ease the rules on infrastructure and housing construction, which has led to higher rents and lower house prices.
Another advantage of these cities is the weather. Amazon's success has taken Seattle by surprise, according to Terrazas. As a result, the city has been slow to relax the rules for building infrastructure and new housing. The stiff competition for the purchase or rental of homes has subsequently pushed house prices and rents to unprecedented heights.
Last week, the mayor of New York City, Bill de Blasio, announced his intention to invest $ 180 million in improving the infrastructure of Long Island City. "D.C. and New York, even if it's just 25,000 new jobs, knows that it's coming, "Terrazas said. "They can plan this and make sure the infrastructure is in place before employees look for work."
Is New York and Crystal City obvious choices?
While Amazon has received more than 200 proposals from US cities to host the new headquarters – a number of economic incentives to soften the agreement – it is likely that the company has only considered a handful, said Scott Galloway, CEO of New Gartner L2, York City-based business intelligence firm.
"It was over before it started," he said. Galloway thinks that Amazon has bought the headquarters to boost its bargaining power with a smaller number of favorite cities. Newark and New Jersey have offered up to $ 7 billion in tax incentives and other cities have spent thousands of dollars on marketing campaigns. (Amazon did not return a comment request on Galloway's remarks.)
In fact, Galloway predicted that Bezos would choose the city of New York or the Washington, DC area, the billionaire owning homes at these locations. "When you're the richest man in the world, the only thing you can not buy is immortality. You do not want to live far from headquarters, "said Galloway. "These new sites will be 15 minutes by bike from the houses that Bezos already owns."
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