This story was originally published in Multifamily Executive.

Amazon's Seattle headquarters
Courtesy Amazon/Jordan Stead Amazon's Seattle headquarters

A new look at what will happen to the rental market in the city selected for Amazon's second U.S. headquarters finds that impact on rents may not be as large as originally thought.

Commercial real estate data analytics firm CoStar Group estimates that Amazon’s arrival could lead to an additional 1% of rent growth per year in the best case—and would have limited effect in large markets like New York or Los Angeles.

The analysis also found that the effect would be proportional to the size of the market and have the largest effect on the office market.

Austin, Texas; Nashville, Tenn.; and Raleigh, N.C., would see the largest Amazon effect across office, retail, and apartment sectors, while larger markets, including Los Angeles, New York, Washington, and Chicago, would feel very little impact from a potential Amazon arrival, according to CoStar. In Washington, D.C., Amazon’s effect per year is predicted to be a 0.25 percent rise in office rents, a 0.16 percent rise in apartment rents, and a 0.25 percent rise in retail rents.

This analysis is in line with other reports showing Amazon's impact on large markets to be small, because demand for housing would be more distributed.

“In a large market like New York, Amazon’s arrival could transform a submarket or neighborhood in the way that Google transformed Chelsea, but the overall market is just too large for a single occupier to move the needle,” says John Affleck, international economist at CoStar Group. “Many Amazon employees will likely buy a home rather than rent, lessening the stress an Amazon arrival would put on the rental market. Get ready for higher home prices, though."

Here's how CoStar breaks down the rental scene in each of the markets under consideration:

Metro Current Rent Base Case Forecast Rent, 2028 Amazon HQ2 Case Forecast Rent, 2028 10-Year Amazon Effect on Apartment Rents Amazon Effect Per Year on Apartment Rents
Raleigh, NC $1,038 $1,177 $1,317 11.9% 1.13%
Nashville–Davidson–Murfreesboro–Franklin, TN $1,107 $1,200 $1,300 8.3% 0.80%
Columbus, OH $905 $982 $1,054 7.4% 0.72%
Pittsburgh, PA $972 $1,029 $1,103 7.2% 0.70%
Newark, NJ–PA $1,495 $1,566 $1,678 7.1% 0.69%
Austin–Round Rock, TX $1,206 $1,450 $1,553 7.1% 0.69%
Miami–Miami Beach–Kendall, FL $1,751 $1,927 $2,057 6.7% 0.65%
Denver–Aurora–Lakewood, CO $1,351 $1,448 $1,528 5.5% 0.54%
Indianapolis–Carmel–Anderson, IN $831 $902 $946 4.9% 0.48%
Boston–Cambridge–Newton, MA–NH $2,033 $2,210 $2,277 3.0% 0.30%
Atlanta–Sandy Springs–Roswell, GA $1,133 $1,192 $1,227 2.9% 0.29%
Philadelphia–Camden–Wilmington, PA–NJ–DE–MD $1,224 $1,290 $1,325 2.7% 0.26%
Los Angeles–Long Beach–Glendale, CA $1,776 $1,863 $1,905 2.3% 0.22%
Dallas–Fort Worth–Arlington, TX $1,116 $1,281 $1,307 2.1% 0.20%
Washington–Arlington–Alexandria, DC–VA–MD–WV $1,642 $1,812 $1,840 1.6% 0.16%
Chicago–Naperville–Elgin, IL–IN–WI $1,277 $1,375 $1,393 1.4% 0.14%
New York–Jersey City–White Plains, NY–NJ $2,584 $2,767 $2,800 1.2% 0.12%

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