HQ2 Impact on the Winning City’s Rental Market

The search for HQ2 continues, and Amazon is slowly whittling down its list of top 20 contenders. Visits to the top 20 prospects have been completed, and these cities are eagerly awaiting to hear whether another round of cuts is in the future, or if Amazon is ready to choose its winner.

Recently, Zillow released a report on how local rental prices would be impacted by the new headquarters. Zillow used previous instances of local rent response due to the arrival of workers, along with market data, to determine which cities would see the largest boost to rents if selected.

According to the report, Nashville, Denver and Los Angeles would most likely see the largest boosts, while Toronto, Chicago and Indianapolis would see more modest increases. Which city is more likely to win? A panel of over 100 housing experts in a separate survey by Zillow ranked Atlanta and Northern Virginia as the top two prospects, both of which would receive only modest increases to rents if selected (a 0.4 and 0.6 percentage point boost, respectively).

Here’s Zillow’s estimated impact on rents for the 17 metro areas Amazon is considering:

1. Nashville, Tenn.
   Median Rent: $1,497
   Zillow Rent Forecast: 0.9 percent
   Amazon Effect: +2.4 percentage points

2. Denver, Colo.
   Median Rent: $2,047
   Zillow Rent Forecast: 3.6 percent
   Zillow Rent Forecast: +2.3 percentage points

3. Los Angeles, Calif.
   Median Rent: $2,746
   Zillow Rent Forecast: 3 percent
   Amazon Effect: +1.9 percentage points

4. Raleigh, N.C.
   Median Rent: $1,436
   Zillow Rent Forecast: 2.4 percent
   Amazon Effect: +1.9 percentage points

5. Pittsburgh, Pa.
   Median Rent: $1,063
   Zillow Rent Forecast: -1 percent
   Amazon Effect: +1.9 percentage points

6. Miami, Fla.
   Median Rent: $1,862
   Zillow Rent Forecast: 2.5 percent
   Amazon Effect: +1.7 percentage points

7. Boston, Mass.
   Median Rent: $2,371
   Zillow Rent Forecast: 3.6 percent
   Amazon Effect: +1.4 percentage points

8. Columbus, Ohio
   Median Rent: $1,317
   Zillow Rent Forecast: 1.1 percent
   Amazon Effect: +1.3 percentage points

9. New York, N.Y.
   Median Rent: $2,401
   Zillow Rent Forecast: -1 percent
   Amazon Effect: +0.8 percentage points

10. Austin, Texas
    Median Rent: $1,686
    Zillow Rent Forecast: 0.7 percent
    Amazon Effect: +0.8 percentage points

11. Dallas, Texas
    Median Rent: $1, 606
    Zillow Rent Forecast: 2.3 percent
    Amazon Effect: +0.8 percentage points

12. Washington, D.C.
    Median Rent: $2,146
    Zillow Rent Forecast: 0.5 percent
    Amazon Effect: +0.6 percentage points
    

13. Atlanta, Georgia
    Median Rent: $1,394
    Zillow Rent Forecast: 3.2 percent
    Amazon Effect: +0.4 percentage points

14. Philadelphia, Pa.
    Median Rent: $1,579
    Zillow Rent Forecast: 0.4 percent
    Amazon Effect: +0.4 percentage points

15. Toronto, Canada
    Median Rent: $1,031 (CAD $1,333)
    Zillow Rent Forecast: 1.4 percent
    Amazon Effect: +0.2 percentage points

16. Chicago, Ill.
    Median Rent: $1,633
    Zillow Rent Forecast: -0.2 percent
    Amazon Effect: +0.1 percentage points

17. Indianapolis, Ind.
    Median Rent: $1,208
    Zillow Rent Forecast: -0.2 percent
    Amazon Effect: +0 percentage points

“In many respects, the results are intuitive,” says Zillow’s Economic Research Director Aaron Terrazas. “Smaller markets and/or markets with a record of less responsive (or ‘elastic,’ in economist-speak) housing supply should expect a larger increase in rent growth. Bigger markets and/or those with a history of rapidly expanding the local housing supply should expect a smaller impact. And in larger markets with more diversified labor forces, fewer workers would likely have to relocate to the area to fill the new jobs, which is also likely to blunt rent growth.”

For more information, please visit www.zillow.com.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.