How Amazon HQ2 Will Impact Mortgages, Housing, and Culture for One Lucky City
Sometime next year, we’ll find out which North American city will be the new home for Amazon HQ2, the massive project to build a second headquarters for one of the world’s largest companies. Without a doubt, the arrival of Amazon will impact local mortgages and everyday living in the chosen city, both positively and (in some cases) potentially problematically.
Amazon and the HQ2 Project
Amazon’s announcement for requests for proposal on September 7 stoked a “frenzy” of a response. Michael Langley, 2017 board chair of the International Economic Development Council, summed it up as “Everybody in this country — and frankly probably in North America, Canada, and Mexico included — is excited and thinking, ‘Oh my gosh, what an opportunity for our community.” In the end, the October 19 deadline brought in a total of 238 proposals from 43 U.S. states and 11 other North American provinces, districts, and territories, including one from Puerto Rico.
Bloomberg noted the scale of the HQ2 undertaking is almost unprecedented. In effect, it’s like a city bidding for the Summer Olympics. Over time, Amazon’s HQ2 is expected to build and fill eight million square feet of office space with 50,000 employees, with most earning salaries over $100,000.
Amazon said in its announcement that HQ2 is expected to be “fully equal to [the] Seattle headquarters.” The company’s 40,000 Emerald City headquarters employees will reportedly have the option to continue working at HQ1 or potentially move to HQ2. The company stressed the project would be a complete headquarters and not a satellite office.
Criteria released with the call for proposals said strong local educational facilities were “critical” for meeting talent needs. A friendly business environment, livability, a minimum area population of one million, proximity to a major airport, and access to the “maximum transport and housing options” for workers were also specified criteria for application.
HQ2 Impact on Mortgages and Housing
HQ2 is the kind of project that could turn a “second-tier city into a super-hot metropolis,” according to Realtor.com. Being the city chosen for this office could reverse the fortunes of a declining area or send an affluent one to still greater heights. It’s going to be a huge change for one lucky housing market out there.
“[E]ven being on the short list will jump-start a lot of development activity,” John Boyd, principal at Boyd Company, a Princeton, N.J.-based relocation specialist, told Realtor. While a building boom is likely to follow Amazon’s announcement, that may not immediately help the wallet of locals. The chosen city is likely to cause rental rates to spike. Home sale prices would also climb, owing to demand, and it may be more difficult for starter-home buyers to get a mortgage.
However, one need not speculate too much, as there are models of what to expect. One Seattle native took to the New York Times to warn HQ2 suitors that the first thing Amazon “disrupted” was Seattle itself. Timothy Egan notes that the median house price has doubled in five years, from $350,000 to $700,000. Seattle was once “a place where teachers and cops used to be able to afford a house with a water view,” he noted.
Another city to look to is Dallas, which has seen more than 200 companies flock to the region since 2010. Those companies brought an estimated 500,000 jobs and grew the Dallas–Fort Worth–Arlington, Texas regional population by 1.36 million from 2006 to 2016, according to an article from Realtor.com. A median-priced Dallas home could be had for $145,800 in 2008. By 2016, the median price in Dallas had climbed 56 percent, to $227,100, compared to a 19.8 percent gain nationally.
All told, current homeowners and skilled workers stand to gain the most from Amazon relocating to their city. Home values will go up, particularly in desirable areas near Amazon’s campus. Skilled workers may find their employment prospects improve, whether they work at Amazon or not, which could help them keep up with local rent inflation.
HQ2 Impact on City Life and Culture
Seattle is also a model for helping to predict how city life and culture will be affected by HQ2. USA Today reports that Amazon has promised to spend more than $5 billion on construction for the new headquarters. This figure pales in comparison to the $38 billion Amazon has sunk into Seattle’s economy over the years. Beyond its 40,000 HQ1 employees, 50,000 non-Amazon jobs in Seattle are said to be due indirectly to Amazon’s presence.
The influence of these figures can’t be ignored. Amazon’s HQ2 announcement led to Green Street Advisors, the real estate research firm, downgrading Seattle’s growth estimate for 2021 by 1.5 percentage points. That’s understandable when you consider Amazon leases one-fifth of Seattle’s Class-A office space.
For HQ2, all those new Amazon and non-Amazon employees will stoke the local economy. The new workers and their families may even change the economy, noted USA Today. Amazon’s hip millennial workforce could spur a new demand for electric car infrastructure, artisanal retailers, or hip bars and restaurants. “Your city’s going to experience a lot of changes,” C.J. Gabbe, professor of urban planning at Santa Clara University in Santa Clara, Calif., told the news outlet. “In Seattle, some people feel positive about them, and some feel like their community is vanishing.”
At the New York Times, Kirk Johnson observed that Amazon changed how Seattle sees itself and how it is seen by the world. Johnson says HQ2 will “magnify a city’s charms and its warts.” Another notable observation is that Amazon is an engine for change, but not a predictable one. What started as a Seattle book retailer became a retailer of almost everything, then a services portal and a key cloud-computing infrastructure giant. Most recently, there’s Amazon’s acquisition of the Whole Foods grocery empire. So, while change is certain, what kind of change is hard to say.
Some people are energized by change; some people dread it. That divide is likely to define what HQ2 means for its chosen city. Those who are most adaptable, well positioned, and industrious could fall in love with their hometown all over again. Others may have a more difficult time with such a transition. No city or economy stays the same forever – change is inevitable. For one lucky city in North America, HQ2 could offer a new opportunity for a more vibrant, booming, and history-making future.