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The Amazon Effect: New York and Virginia Locations for HQ2

Nov 13, 2018 12:59:51 PM

Today, Amazon officials announced their final selection for the location of their second headquarters. In a change to the original plan, Amazon decided to split the location of its new headquarters between two cities, and chose New York and Arlington, Va. Also to note, Amazon announced Nashville will be home to a new Center of Excellence location for its operations business. This hub is responsible for the company's customer fulfillment, transportation, supply chain and other activities. It is projected that this addition will create approximately 5,000 new jobs.

Since January, when Amazon announced it had narrowed down the list of North American cities to only 20 locations in consideration to host its second headquarters, CoreLogic has been carefully considering what might put one city above the rest. Researchers initially reported in this blog: Will Amazon Consider Home Price Trends in Their Quest to Find a Second HQ Location?, on the home price changes year-over-year for 19 of the 20 cities (CoreLogic does not follow home price data for Toronto, Canada). Several months later, CoreLogic asked all of the team members from the Office of the Chief Economist to opine on a city they thought might have the edge over the other finalists on Podcast - CoreLogic Economists Consider Amazon HQ2 Final Cities. Coincidentally, but not surprisingly, Dr. Frank Nothaft, chief economist for CoreLogic, was correct in his prediction that Amazon would likely choose the Washington, D.C., area. Additionally and most recently, Shu Chen wrote a blog considering Housing Supply and Prices for Amazon HQ2 Finalist Cities. Looking back on CoreLogic's research, it appears that the large share of tech workers, access to airports and public transportation, and lobbying may have been among the factors in the choice of HQ2 site locations.

Employees moving to the area will find the following housing market conditions:

  • Price increase of 1.7 percent in New York City and 3.2 percent in Washington, DC metro areas over the past year.
  • Single-family rent increases of 2.5 percent in New York City and 2.3 percent in Washington, D.C., metro areas over the past year.
  • For sale housing supply of five months in New York City and three months in Washington, D.C., metro areas, compared with 3.5 months nationwide.
  • Median home prices of $470,000 in New York City and $410,000 in Washington, DC metro areas, about double that of the national median home price of $225,000.

Amazon has already indicated that it will take several years to complete the campus and updates to the surrounding areas for these new locations, but now a different debate may emerge. Will home prices in New York and Northern Virginia spike? Will there be enough housing supply for the new employees? The influx of employees is bound to bring change to the cities and neighboring cities. Infrastructure will most definitely be impacted, and other socioeconomic fluctuations may occur.

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