Think Real Estate Prices Are High Now Wait Until Amazon Moves To Town

Dated: 01/23/2018

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Credit to : DOUGLAS HANKS 

January 20, 2018 05:39 AM

As leaders of Miami and 19 other cities celebrate their inclusion in Amazon’s short list for asecond headquarters, some affordable-housing advocates have a warning: Be careful whatyou wish for.

Amazon is a force behind Seattle’s tight housing market, where the online giant’sheadquarters employs about 40,000 people and dominates downtown’s office market.Amazon occupies as much office space as the city’s other Top 39 commercial renterscombined, and its well-paid workforce is credited with helping boost residential rents fasterthan in almost any other city in the country.

That’s led to some caution about a downside needing to be managed if Amazon comes totown and exacerbates a city’s already challenging housing market.

“An Amazon HQ2 in Chicago would supercharge gentrification in our neighborhoods, just asin Seattle,” labor leaders, including Chicago Teachers Union president Karen Lewis, wrote ina Chicago Tribune essay last fall urging the city to demand a “community benefits”agreement as part of its Amazon application. “Real estate experts predict that pressure onlow-income residents in Chicago’s gentrification hot spots will intensify, and even residentsin previously non-gentrified neighborhoods would face displacement.”

Worries over rising real estate prices are basically the exact flip side to the enthusiasm foractually landing an Amazon headquarters expected to employ about 50,000 people with anaverage annual wage topping $100,000. With 50,000 people on its payroll, Amazon wouldeasily qualify as Miami-Dade County’s top employer. That influx of well-paid jobs wouldboost demand for real estate, too. Higher demand squeezes supply, prompting prices toincrease.

“There’s no perfect world where you have great economic growth and super-cheap housing,”said Sean Snaith, an economics professor at the University of Central Florida.

The Seattle area can’t link its high home prices only to Amazon. The online retailerdominates downtown Seattle itself where it occupies or has plans to take over three dozenoffice buildings. But other major corporate players — including Microsoft, Starbucks andBoeing — give the kind of Fortune 500 line-up that economic-development leaders dream ofelsewhere in the country. That’s put pressure on housing prices — great news for propertyowners, but a challenge for people looking to buy.

Seattle’s experience is the template for predicting what Amazon’s HQ2 could mean for othercities. While big companies dominate certain suburbs — such as Google and Facebook inMountainview, California — Amazon’s Seattle presence is the largest of its kind in a city, theSeattle Times reported.

Under the headline “Thanks to Amazon, Seattle is now America’s biggest company town,”the August 2017 article stated: “Amazon now occupies a mind-boggling 19 percent of allprime office space in the city, the most for any employer in a major U.S. city.”

Weeks later, Amazon stunned its hometown by announcing plans for a second headquarterssomewhere else in the country. For Seattle, the news meant economic anxiety coupled withthe possibility of a more hospitable housing market. “Amazon topping out here and growingelsewhere could slow bidding wars for homes as well as the influx of newcomers driving uprents,” the Seattle Times reported.

Rev. Audrey Warren, an affordable-housing advocate in Miami and pastor at the First UnitedMethodist Church, said the Amazon news brought concerns that the city’s struggle to makerents affordable could be getting even harder. But she said the challenges must be addressedwith or without Amazon, and that there’s no reason to turn away so many jobs over worriesabout a long-running problem.

“I think Amazon could be collaborating with other organizations to promote affordablehousing,” said Warren, who is part of the Miami PACT advocacy group. “I think it will begreat if Amazon comes.”

Ken Russell, a Miami commissioner running for Congress as a Democrat, said residents willdefinitely face higher rents and out-of-reach prices — but not because of Amazon, which he’shoping to recruit.

Miami already has a housing crisis,” he said. “Left to market forces here, the city is gettingless and less affordable.”

An analysis by Apartment List predicts the Miami area would see a quickening pace of rentincreases should it land Amazon’s secondary headquarters. The rental-listing organizationpredicts rents will increase about 3.6 percent a year in the Miami area without Amazon. Addin Amazon’s “HQ2” and Apartment List predicts rents would go up another more than half-a-percentage point each year. That may not sound like much, but it would cost the averagerenter about $7,000 over 10 years.

Still, it’s not as bad as what the analysis predicts for Raleigh, North Carolina, where thehousing market doesn’t have the capacity to absorb new residents like Miami does. It ranksfirst in Apartment List’s roster of HQ2 finalists facing rent increases, with the average renterexpected to pay about $15,000 more over 10 years if Amazon calls Raleigh home.

Juan del Busto, a former head of the Federal Reserve branch in Miami, all but scoffed at theidea that anyone should worry about housing prices in relation to Amazon considering amove to Florida.

“Anything that will create jobs is a positive,” del Busto said. “I don’t see anything negative.”

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Jayson Yunis

Jayson Yunis epitomizes integrity, energy, hustle, and creative service in every detail of your real estate transaction. Born and raised in Miami. This native not only knows Miami, he loves Miami and ....

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