Amazon has made the process around selecting a location for its second national headquarters into an extremely high-profile, yet secretive, process. New research from Zillow makes the stakes higher for investors trying to guess which metro area will be the lucky winner of HQ2. Zillow researchers announced that some cities could see as much as double rents and home values if those cities win the HQ2 bid compared to what they will see if they do not. For example, Nashville, Tennessee, is projected to see rent grow about 1% without HQ2, but 2.4% if the city lands the new development.
The source of this rental inflation lies in the 50,000 highly paid jobs Amazon projects it will bring to its new location. Nashville is the most extreme example of the potential impact, but other cities could see substantial increases compared to rental rate increases without HQ2. Of the finalist cities, Toronto, Chicago, and Indianapolis will likely see the most modest bumps to annual rent appreciation.
A recent panel of housing experts weighed in on the topic of the eventual HQ2 winner, which is likely to be announced sometime this fall. Those experts ranked Atlanta, Georgia, and Northern Virginia as the top two most likely to be chosen. Atlanta could get an extra 0.4% boost to rent appreciation over its projected 3.2% increase, and Northern Virginia about 0.6% extra. Northern Virginia includes the Washington, D.C. area, where Amazon founder Jeff Bezos already owns a home.
Panelists cited proximity to policymakers in Washington, D.C. and an emergence as a growing tech sector among strengths for Northern Virginia. Atlanta boasts a prime geographic location, abundant space to grow, a business-friendly regulatory climate, and some of the lowest housing costs among the finalists. The panel listed Los Angeles, the New York area, and Miami, Florida, as among the least likely to land HQ2.