How Much Would Winning Amazon HQ2 Drive Up Rents In Your City?

Last month, when Amazon announced plans to open a second corporate headquarters, it invited city and state governments to compete for selection, unleashing provincial rivalries typically reserved for major sporting events.

Thursday marks the deadline to submit bids, and–if you go by local press–nearly every big city in America is contending for it, some offering huge tax breaks.

It’s easy to see the appeal. Over the next 10 to 15 years Amazon plans to hire up to 50,000 full-time employees at HQ2, paying each an average of $100,000 a year.

The company expects capital investment in the 8 million square foot project to exceed $5 billion. Moreover, it estimates that every dollar it invests in Seattle–its current home–generates an additional $1.40 for the city’s economy.

But it’s not all smiles. Seattle has led the nation in home-price growth for 10 consecutive months and rents there are among the fastest growing in the nation. Many blame Amazon and the tech ecosystem that has grown up around it. This led rental search site Apartment List to ask, how much would HQ2 add to rents in the metro it lands in?

The impact, it turns out, would vary widely from city to city.

At one end of the spectrum is Raleigh, N.C., where Apartment List estimates winning HQ2 could add as much as 2% to rent growth annually, costing renters up to $15,000 over a decade. Conversely, in Dallas, the impact could be as little as 0.2%, inflating rents by $2,000 in 10 years.

Apartment List looked at 15 metropolitan areas reportedly vying for the project, analyzing Census and Bureau of Labor Statistics data to determine the propensity and room to build new housing, market slack and the impact of an influx of high-earning residents.

For example, building permits are already a hot commodity in San Jose, Calif. Just one has been issued for every 3.2 jobs created in the last 10 years. The ratio could jump to 4.7 jobs per permit if Amazon moves there. Plus the capital of Silicon Valley already has the lowest vacancy rate of the cities analyzed.

As a result rents there could rise an additional 1% to 1.6%. But at $58,900, San Jose has the highest median income of the group. While cities like Baltimore or Pittsburgh are more able to build, a large number of workers earning more than the area median could lead to a more conspicuous price impact.

“Rents are already rising rapidly nation wide and half of renters are cost-burdened,” notes the report. “The fact that one company can have such noticeable impacts on the rental market, especially in metros with a constrained housing supply, is astounding.”

Check out the stats for all 15 metros:

Raleigh, N.C.

Median rent: $1,113

Vacancy rate: 8%

Median income: $36,320

Annual rent growth 2005-15: 3.2%

Estimated added rent growth: 1.5% to 2%

Pittsburgh

Median rent: $837

Vacancy: 11%

Median income: $36,210

Annual rent growth 2005-15: 3%

Estimated added rent growth: 1.2% to 1.6%

San Jose, Calif.

Median rent: $2,691

Vacancy: 4%

Median income: $58,900

Annual rent growth 2005-15: 5.1%

Estimated added rent growth: 1% to 1.6%

Baltimore

Median rent: $1,406

Vacancy: 10%

Median income: $41,560

Annual rent growth 2005-15: 4.2%

Estimated added rent growth: 1% to 1.3%

Detroit

Median rent: $998

Vacancy: 11%

Median income: $37,830

Annual rent growth 2005-15: 2.2%

Estimated added rent growth: 0.8% to 1.2%

Denver

Median rent: $1,480

Vacancy: 5%

Median income: $41,250

Annual rent growth 2005-15: 4.8%

Estimated added rent growth: 0.8% to 1.1%

Austin, Texas

Median rent: $1,386

Vacancy: 8%

Median income: $37,330

Annual rent growth 2005-15: 4.7%

Estimated added rent growth: 0.8% to 1%

Minneapolis

Median rent: $1,217

Vacancy: 5%

Median income: $41,880

Annual rent growth 2005-15: 2.8%

Estimated added rent growth: 0.7% to 1%

Philadelphia

Median rent: $1,253

Vacancy: 9%

Median income: $39,720

Annual rent growth 2005-15: 3.1%

Estimated added rent growth: 0.6% to 0.8%

Boston

Median rent: $1,969

Vacancy: 7%

Median income: $48,020

Annual rent growth 2005-15: 2.8%

Estimated added rent growth: 0.5% to 0.8%

Atlanta

Median rent: $1,160

Vacancy: 9%

Median income: $36,340

Annual rent growth 2005-15: 2.5%

Estimated added rent growth: 0.5% to 0.7%

Chicago

Median rent: $1,249

Vacancy: 9%

Median income: $38,250

Annual rent growth 2005-15: 2.6%

Estimated added rent growth: 0.4% to 0.6%

Los Angeles

Median rent: $1,807

Vacancy: 6%

Median income: $38,700

Annual rent growth 2005-15: 3.7%

Estimated added rent growth: 0.3% to 0.5%

Washington, DC

Median rent: $1,753

Vacancy: 6%

Median income: $50,690

Annual rent growth 2005-15: 4.2%

Estimated added rent growth: 0.3% to 0.5%

Dallas

Median rent: $1,202

Vacancy: 7%

Median income: $36,450

Annual rent growth 2005-15: 3.3%

Estimated added rent growth: 0.2% to 0.4%

Source: forbes.com