The economic benefits of landing Amazon's second North American headquarters are unquestionable. The tech giant wants to find a city where it can build a space equal to the size of its Seattle home base, and plans to bring 50,000 high-paying jobs to the city it chooses.
World Business Chicago, the city's economic development arm, called the overall economic impact of Amazon’s HQ2 "unprecedented." The group conducted a study on the economic impact of HQ2 and found that Amazon’s new space would generate $341 billion in total spending over 17 years. The report also found that for each dollar Amazon invests in operations and construction of HQ2, it could generate an additional $2.72 for the overall Chicagoland economy.
However, that's not to say there won't be a downside for whichever city lands Amazon. Startups will certainly have challenges hiring against a company that's bringing in workers by the tens of thousands. Taxpayers will be on the hook for millions in subsidies and incentives that local governments are willing to give Amazon. And, perhaps the most immediate and wide-spread impact of all: housing costs will rise.
In Seattle, rent increases outpace almost all other U.S. cities, and it has the fastest growth rate in home prices nationwide, according to ApartmentList.com.
To see how Amazon's second headquarters could impact cities across the U.S., ApartmentList took a look at 15 cities that are vying for HQ2 and studied how their rent prices would change. Overall, the study says some cities can expect an additional annual rent increase of up to 2 percent each year, on top of the rent growth they would experience without Amazon.
Two percent might not sound like a lot, but in some cities, where rent prices are already skyrocketing, two percent a year could quickly make housing less affordable for many.
The cities where rent would increase the most are Raleigh, N.C., Pittsburgh, Baltimore and San Jose, according to ApartmentList, where rents are expected to increase by an additional 1 percent or more per year with the addition of Amazon.
Cities where the rent increase will be felt the least are Washington, D.C., Los Angeles, and Dallas, where their rents are expected to increase only 0.2% to 0.5%. Bigger metro areas with more vacant units, higher median incomes, and that have the ability to build new housing quickly, will see less of a jump in rent prices because of Amazon.
Chicago is among the cities that will see less of an impact from HQ2, ApartmentList says, though you'll still see an increase in rent. Prices are expected to rise 0.4% to 0.6%.
"With the existing vacant units and relative ease of building, Chicago is better prepared to handle the job growth from the Amazon HQ2 than most metros," the study says. "Although Chicago does not have the highest vacancy rates of the metros studied, it does have the most overall vacant units due to its large housing stock and 8.6 percent vacancy rate."
You can read the full report here.
