After months of a media-enthralling search that drew dozens of applicants across North America, online retail giant Amazon has determined it will split its HQ2 project into two East Coast cities.
Amazon has selected Crystal City, Va., and Long Island City, N.Y. as the new homes for some 50,000 employees. The company said it expects to invest over $5 billion in construction to grow the new offices, and that they will “be a full equal to our current campus in Seattle.”
The moves will undoubtedly have profound effects on real estate in Crystal City — a suburb of Washington D.C. — and in the Long Island neighborhood of Queens, fueling speculations that home values and rents will swell alongside the infusion of more Amazon employees.
While prices likely will rise, the impact on housing might not be as significant in the two metro areas as compared to some of the other 20 finalists, according to a study from Apartment List Inc. Rents would increase by less than 0.5 percent in Crystal City, Va., and Long Island City, N.Y., as compared to 4.8 percent in Denver, Colorado, the study found.
Market Watch also observed that the prospective rise in home values would largely fall in step with recent trends in the two cities. Since 2013, home values in New York City have increased a whopping 42.5 percent, and prices in Arlington County, Va., have grown 15.5 percent, according to Market Watch. During the same period, home values in Amazon’s original headquarters, Seattle, have swelled 73 percent.
News that HQ2 will be split into two offices, however, will likely temper the prospective increases in home values and rent hikes, according to Zillow Research.
“The latest news that Amazon may be splitting its HQ2 across two locations dilutes its impact on the selected markets,” the company said. “Some finalist cities had concerns about the impact that HQ2 would have on housing affordability, a top concern across most of the country, but 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, and separating its HQ2 locations also gives Amazon the chance to create a broader national footprint.”
One firm that’s likely thrilled by the news is the Third Avenue Real Estate Fund. Third Avenue announced in May that was planning to buy $10 million worth of shares in the real estate investment trust JBG Smith, which has extensive holdings in Crystal City. The company cited, among other factors, the likelihood that Amazon’s second national headquarters would be located in the area.