It's Official: Amazon Reveals the HQ2 Location(s)
Following fourteen months of speculation over Amazon’s next move, the wait has come to an end! Earlier this week, Amazon announced not one, but two new HQ2 locations. The first is in the Long Island City section of Queens, New York; while the second is in Crystal City, Virginia, just outside of Washington D.C. After an initial announcement in September 2017, Amazon narrowed down the list from 238 candidates to a top twenty earlier this year. As last week’s headlines predicted, the e-commerce giant has selected two cities.
Market experts say that concern about how HQ2 might impact Seattle real estate could have been a cause for slower sales and rising inventory in recent months, but now that the news is out, Seattle can “breathe a little easier.” Seattle Times asked in a recent article, “Will Amazon’s HQ2 Sink Seattle’s Housing Market?” The quick answer is no. And as Realogics Sotheby’s International Realty notes, Amazon’s rise of recent years has impacted the local economy, however other tech companies such as Google, Facebook, Microsoft and Expedia have also contributed to Seattle’s rise.
A Two-City Approach
When news broke that Amazon was likely to select two HQ2 destinations, the community was shocked. What happened to the 50,000 lucrative tech jobs and $5 billion investment promised to the winning city? many asked. A primary reason is talent recruitment. As Wall Street Journal reports, executives expressed concern over attracting top tech workers to one location. The dual-city approach will also help “ease potential issues with housing, transit and other areas where adding tens of thousands of workers could cause problems.”
The Crystal City location seemed like an obvious choice for the tech titan, given that Bezos owns local real estate in the region and that he acquired Washington Post in 2016. The Journal also notes that it offers easy access to Washington D.C., the airport and public transportation.
Long Island City is a bit more interesting when it comes to Amazon’s competition. Google recently announced massive expansion in New York City as well. Having served as an industrial neighborhood in the past, it is rapidly growing and it too is easily accessible nationally by airplane and locally “by multiple subway lines, the Long Island Rail Road and two ferry stops.”
At the end of the day, these two cities came on top because of ‘access to mass transit, proximity to an airport with direct flights to and from Seattle and—perhaps most important—a pool of available tech talent nearby.”
Impact on Seattle
Dean Jones, owner and chief executive officer of Realogics Sotheby’s International Realty has been following these trends closely since September of last year. He recently outlined implications on the Seattle market, looking at slowing sales that some brokers have called the “Amazon Pause”—would-be-buyers were sitting on the sidelines (many Amazon employees) were waiting on an official HQ2 announcement before purchasing a home.
As Jones and other market experts predicted, Amazon seems to be expanding via satellite outposts versus building a large campus to rival Seattle.
“This effectively resolves fears that Seattle’s rising star may someday fade as less expensive markets draw jobs away,” Jones said. “I don’t find Long Island City or Crystal City to be particularly compelling for Seattleites or a bargain.”
The median home price in New York and Virginia are similar to that in Seattle, but with a state income tax that Washington doesn’t have. There are other costly considerations as well, such as comparative climate, lifestyle, culture, education and the sheer cost of relocation.
“Our real estate advisors are uniquely qualified to explore the impacts of HQ2 in each neighborhood and can make direct referrals to affiliated brokers in New York and the D.C. area,” adds Jones. “Sotheby’s International Realty provides our clientele with exclusive advantages for Amazon relocations, both inbound and outbound.”
So what does this mean for Seattleites? Fundamentally the Seattle metro area is primed for more housing demand, given the entrenched tech boom, which was covered in a recent post entitled “Trendlines vs. Headlines.”