After a yearlong beauty contest in which 238 cities vied to win Amazon's favor and become home to the company's mammoth second headquarters, the e-commerce giant is reported to be on the verge of announcing a surprise winner. The twist in the story? Amazon will split its HQ2 between Long Island City in Queens, New York, and the Crystal City area of Arlington, Virginia, a suburb of Washington, D.C.
No doubt analysts will spend weeks pouring over the decision from every conceivable angle, but one group that's going to be interested in getting an instant sense of the impact of the decision will be renters in the chosen cities. Is Amazon going to send local home prices and rents skyrocketing, as it did in Seattle?
Two winners means lower rent increases.
When earlier studies looked at the impact of possibly hosting Amazon's HQ2 on local property values and rents, the results were downright alarming for renters. One recent analysis by lender Mr. Cooper predicted gigantic spikes in property prices should Amazon pick a smaller contender. Newark, New Jersey, and Raleigh, North Carolina, could have seen property prices shoot up by around 30 percent if Amazon moved in.
A host of other studies and reports from property experts came to similar conclusions: smaller, less-developed cities would see bigger jumps in the cost of housing than already bustling metropolises. That already suggests New York and D.C. area residents are likely to be less affected by Amazon's final choice than renters in, say, Raleigh would have been.
But no one anticipated a split winner. How does two cities grabbing the prize affect the numbers? Quick-moving Zillow has updated its original predictions and it's good news if you're already struggling to afford a home in Long Island City or Crystal City.
"The latest news that Amazon may be splitting its HQ2 across two locations dilutes its impact on the selected markets," notes the real estate marketplace. "The smaller scale of the new headquarters likewise would shrink its effects on affordability. It will be an easier undertaking to meet a smaller influx of housing demand."
Smaller impact doesn't mean no impact.
While the surprise ending to Amazon's search is likely to mitigate some of the negative impacts of its arrival, it's still impossible to move 25,000 mostly high-paying jobs into a neighborhood and not cause a few waves.
Amazon hasn't even officially made its announcement yet and locals in both Crystal City and Long Island City are already publicly fretting about the move. "The roads are already pretty clogged as it is," D.C. resident Mark Manivog fretted to CNBC. "I'll be happy, there will be more jobs and more opportunity, but at the same time there is the traffic issue and there is the housing price issue."
"Seven local community organizations signed an open letter to CEO Jeff Bezos listing
several concerns, including out-of-state hiring, unaffordable housing, and gentrification," reports Yahoo! Finance as part of a story bluntly headlined "Amazon is reportedly nearing a deal to make New York City one of the homes of its second headquarters -- here's why it would be disastrous."
In Queens, Amazon's impact on the local area will depend greatly on how much the city and state invest in upgrading the area's rickety public transportation and sewage infrastructure (as well as spreading around the spoils of Amazon's arrival). At this early stage the exact numbers remain unclear, according to the The New York Times.
The bottom line is any shift in a neighborhood on the scale that Amazon is proposing is going to cause some serious changes. There will be winners (including the savvy real estate investors who have been betting on the Arlington area for weeks) and there will be losers. Splitting HQ2 means a smaller impact on those most likely to feel the negative effects (hard-pressed renters, people unlikely to find employment with Amazon), but there's still likely to be an impact.
So don't panic, but yes, if you rent you should be concerned.