How will the move impact housing prices, job markets, and public spending?
On Nov. 13, online retail giant Amazon announced it is establishing a second headquarters in Northern Virginia. While state officials are celebrating the development, the anticipated impact it will have on the area’s housing market is eliciting varied reactions.
Amazon announced the new headquarters, or HQ2, will be in an area in Virginia it called “National Landing” — piecing together Crystal City, eastern Pentagon City, and the eastern portion of Potomac Yards. HQ2 will create 25,000 jobs, the announcement said, with an average salary of $150,000; and it will generate a projected $3.2 billion over the next 20 years as a result of investment and job creation.
Virginia Gov. Ralph Northam said this is a “big win” for the region, and he is proud Amazon “recognizes the tremendous assets the Commonwealth has to offer.”
According to the Virginia Economic Development Partnership, Amazon will be eligible to receive up to $22,000 per job created or up to $550 million in incentives from the state of Virginia. In addition, the state has committed to investing up to $295 million in the area’s transportation infrastructure, and an additional $375 million over 20 years in what Northam’s office has called the “tech talent pipeline.” This investment will go toward new master’s degree programs in computer science at the George Mason University Arlington campus and for Virginia Tech to establish a new "Innovation Campus" in Alexandria, Virginia.
The majority of the jobs HQ2 will bring to the area will be "new hires" and open for applications from local residents. Similar to Amazon's HQ in Seattle, most positions will be in the software engineering field, but there will also be openings in business development, marketing, and program management.
Some experts say the new residents and jobs that will be coming in as a result of Amazon’s arrival are only a part of economic trends that are already in motion for the area.
“I would say this move is a significant and positive moment for the area,” said Dr. Stephen Fuller, professor of public policy and regional development at George Mason University and director of the Fuller Institute, which focuses on economic analysis of the Greater DC area. “The forecast is for Arlington to add about 420,000 new households over the coming years, and this is just 25,000 [jobs].”
Fuller added that the incentive package Amazon received from the Commonwealth is about “half as much as the benefits per job they got from New York,” and that while people were going to come here anyway, “now we know just who they’re going to be — Amazon people.”
Jennifer Toole, real estate agent at TTR Sotheby’s Centurion Group, said housing prices in the area have already been on an upswing for several years and Amazon’s arrival should shield the market from any downturns in the coming years.
Amazon’s decision to split the headquarters between Virginia and New York (which will also be getting 25,000 new jobs) is a blessing in disguise, Toole said: “That way it does bring activity to the area without completely paralyzing the infrastructure.”
Not all residents are pleased with the development, however. “Amazon never asked the residents of these communities how its entry could make current residents’ lives better,” said Lauren Jacobs, executive director of the Partnership for Working Families. “In fact, they demanded that our own representatives hide [from the public] the details of what they discussed and what they agreed to.”
Roshan Abraham, Arlington resident and member of the steering committee of Our Revolution Arlington (ORA), an organization that mobilized around the Amazon relocation, warned that subsequent rent hikes will “price out Arlingtonians who already live here” and criticized the lack of opportunity for the community’s concerns to be heard.
“Even the county recognizes we had no voice, now the plan is done and they’re trying to sell it to us,” he said.
At the same time, Abraham added that “there is still time to hammer out some community benefits”; while he is aware his organization’s efforts won’t stop the tech giant from coming to Arlington, he hopes they can “get Amazon to help the people that are going to be impacted the most.”
Yesim Sayin Taylor, executive director at the D.C. Policy Center, added that “restrictive land use policies,” which are commonplace in the area, play a big role in increasing housing prices and that Amazon’s arrival “sheds a light on problems that are already happening.”
“Paris is six times more dense population-wise than DC, but that doesn’t mean they have crazy skyscrapers everywhere,” Taylor said. “Low-income residents have been already priced out, residents are worried about amenities, and only affluent people can afford to live close to their jobs. We have to understand density is our friend here.”
Sotheby's Toole said she's already seeing some impact on the housing market as potential buyers grow more comfortable with "pulling the trigger on big buys."
"There is already no inventory in the area, so the number of available properties is going to keep going down while prices are going up," she said. "Reluctant sellers now have a lot more questions, and houses that have been sitting on the market now have multiple offers already coming in."
By Anis Modi
Anis Modi is a staff writer for Kol HaBirah.