As many know, Amazon has been looking for its second home. Commonly referred to as Amazon’s HQ2 or simply HQ2, it’s been huge news for months. The decision is highly anticipated and continues to make waves for cities still in consideration and for those who have already been cut from consideration. The economic implications for the chosen city is clearly huge — 50,000 new jobs in the near term alone and the ripple effect on local businesses will be just as big. The decision is expected to come before end of year.
There has been plenty of analysis put forward, especially by those who have skin in the game. Pouring over this analysis, we at Redi Match have been particularly impressed with Amazon’s process of letting cities know why they weren’t chosen and what those cities have done with that information. Of course, our laser focused interest lies in what this means for residential real estate and specifically the opportunity for SFR (single family residence) investors and homeowners. To this, we say thanks Amazon.
For instance, issues surrounding transportation: would you have been aware (or as aware) of the public transportation issues facing a major metropolis such as Detroit? Or the fact that multiple cities that were cut, technically have international airports, but in reality have few international flights and therefore could not be considered as true contenders?
Basic infrastructure alone can create shifts in rents and it can happen fast. Seeing the outcome of a major player like Amazon, are some of these factors now in the consideration set of questions for other companies looking to expand? Do people now become concerned that other companies aren’t going to move or expand in a prospective area? Will demand for rentals and buyer markets soften? It is certainly something that real estate investors should think about.
With the HQ2 decision imminent, how many investors are going to put their money where they believe Amazon will go? Real estate demand is surely going to be prime when they deliver their announcement as housing must be taken into consideration. They need to place themselves somewhere where their employees, 1. can afford to live and 2. there is sufficient supply.
Looking at the other side. How many current Seattle-ites will be relocating? Surely Amazon isn’t going to start up HQ2 with 100% new staff. So will the Seattle market see an uptick in rentals available as some people in Seattle make the move to the lucky lottery city? Perhaps they will consider selling in Seattle. Residential RE in Seattle has been one of the hottest markets in the country and this could be an opportunity to sell and realize some of the gains earned during their homeownership. Current thought is that now is a good time to sell. The housing market continues to be hot, supply is low, the summer selling season is here and interest rates are on the rise.
It is difficult to argue that when Amazon announces their chosen city it’s not going to forever change that city. It will be a boon to the local economy, great for the job market and ripple into all of the service and business industries that we as consumers and employers enjoy every day.
Think about what this could do for Seattle and the HQ2’s city. Think about what it is already doing for (or to) the cities that weren’t chosen. You can read more here about the thought process behind the changes cities that didn’t make the cut are already making. In our analysis, Amazon is making the process very transparent and are providing a lot of feedback on why a particular city just didn’t feel like home. It’s a great third party view of changes, upgrades and more that a city might want to undergo to attract more companies and keep the businesses they have.
The process of HQ2 has been a great public display of the analysis that goes into real estate decisions within one of the world’s largest and forward thinking technology companies. The parallels between their process and that of real estate investors are significant and establishes a more cogent way to approach RE investments. We at Redi Match are all smiles about this valuable lesson delivered to our front door..
#data #realestate #amazon #seattle #HQ2