Well, who would have guessed? Amazon’s new $5 billion office will likely have material consequences of the negative variety for whichever city it lands in.
Actually, there’s a few candidates for people who might say “I told you so,” if presented with Zillow’s recent study that shows rents will rise in nearly all 20 cities which Amazon is considering as locations for its second headquarters. Among them are San Jose’s mayor Sam Liccardo as well as San Antonio mayor Ron Nirenberg and Bexar County Judge Nelson Wolff — all of whom wrote open letters to Jeff Bezos about why they refused to bid for HQ2, mostly due to the company’s blatant request for tax breaks in the competition’s RFP.
The cities that would see the biggest “Amazon Effect” include Nashville, Denver and Los Angeles with rent increases directly attributable to the e-Commerce company being 2.4 percent, 2.3 percent and 1.9 percent, respectively. (Nashville is one of the cities touted as a lead contender by the Wall Street Journal.) The cities with rental markets that would be least affected include Toronto, with only a 0.2 percent increase, and Indianapolis with no increase — it’s the only city that won’t feel the “Amazon Effect,” according to Zillow’s analysis.
The data used for its estimates relies on historical market data and doesn’t take into account what could happen if, like in Seattle, other companies coalesce in the new location Amazon eventually chooses to set up shop. According to Zillow, the median rent in Seattle is now $2,595; the median price of a single-family home is $750,000.
The 20 shortlisted cities that are still being considered as locations for Amazon’s second headquarters, which will house 50,000 employees once built, includes New York, which Zillow estimates would see a 0.8 percent increase in rents if the city was chosen. Amazon is expected to announce the winning city where its HQ2 will be built this year.