Rent Cafe comments on an Amazon-Related Apartment Boom in two cities.
Key Findings
- With a high occupancy rate of 98.2% in Long Island City, future Amazon employees may have a hard time finding an apartment for rent near work. A total of approximately 15,400 units are under construction, planned or in a prospective phase in LIC but that will not be enough.
- LIC is New York City’s hottest neighborhood and also in the US with the most new apartments delivered after the recession, 12,500 units.
- In Crystal City there were no major developments in the last couple of years. However, besides the 3,100 units under construction, planned or prospective, future Amazon employees would have access to more than 205,000 units currently in the entire metro.
- As of 2016, Crystal City boasts a 52% share of Millennials. Long Island City has a Millennial population of 43%.
- The percentage of people holding a Bachelor’s degree or higher in Crystal City is a whopping 85%, while in LIC it’s about half that, 45%.
- Both neighborhoods have witnessed above-average increases in the monthly rent over the past year. The average rent in Crystal City is currently $2,387, up 5% y-o-y. Meanwhile, Long Island City apartments are already seeing steep prices, $3,458 as of October 2018, up 5.1% y-o-y.
Amazon HQ Average Rent Prices
Millennial Hot Spot
LIC ZIP code 11109 made the Top 20 Millennial Hot-Spots in the Nation with a 63% share of Millennials.
Expect to pay $41,496 annually to rent an average apartment in Long Island City.
Income and College Degrees
The median household income in Crystal City is almost double than in Long Island City: $107,478 vs. $54,109.
The percentage of people holding a Bachelor’s degree or higher in Crystal City is a whopping 85%, while in LIC it’s about half that, 45%.
Median vs average is a bad comparison but it’s all I have, so here are the numbers.
The median household income in LIC is $54,109 while the average rent is over $41,496.
Yikes. That’s hot.
Mike “Mish” Shedlock
Let’s not forget Amazon and online shopping slowly has killed off brick & mortar businesses so the way I see it new jobs may exist but any new employment is dead. The reason to buy elsewhere.
I’m sorry but what does this mean? Any new employment is dead?
Get right down to it, and Amazon is a retailer — a business where the merchant either goes for low volume/high markup or high volume/low markup. Amazon is clearly in the high volume business, yet here they are adding a huge amount of overhead with these 50,000 high paid something-or-others in expensive office buildings doing who-knows-what. The business logic of taking on this cost burden escapes me — but the opportunity this presents to competitors will likely not escape Jet.com or Walmart or Ali Baba.
There is an old observation that one of the surest signals of impending decline is when a business builds itself a spanking new expensive HQ. Caveat investor!
Still waiting for the telecommuting revolution…
I have worked in Long Island City for a notorious Money Center Bank in their large office tower there. I can tell you that outside of the band of development along the waterfront, the rest of LIC is a total SH*THOLE. You could not pay me to live there, much less charge me $40,000+ a year in rent.
The only reason I can think of that NoVA campaigned for Amazon to be here is that politicos and big business were on the take. 25,000 jobs at $150K a year (which is below average wages for skilled computer types in DC, by the way) cannot possibly justify the five billion in give aways. (Some of the transportation upgrades, which will do nothing to help, had been on hold, it took Amazon arm twisting to get them back on track). DC does not need more jobs, what it needs is a break in traffic and cost of housing, both of which degrade the quality of life seriously.
The area near Amazon has been renamed also: National Landing. What was the point of that? Apparently “Pentagon” and “Crystal City” aren’t good enough. It’s adding insult to injury that Amazon is telling us to change the names of the places we live and work.
Anyway, DC has 5 million people, Amazon is bringing in 25,000 jobs over the next decade or two. While that will have an impact on private and corporate rents in Crystal City, since the area was maxed out 20 years ago, that’s a tiny number of jobs.
I haven’t talked to anyone local who thinks this is a good thing.
Optimism. The whole reason is because of the additional jobs that might be created by bringing in an extra 25K people. And their access to credit. If some of these newcomers came from a dense city center environment with public transportation, well, they’ll be buying a car and a house and all the furnishings. But since they’re young they’ll still want to hang out at bars and restaurants. Think of all the ancillary employment.
Of course all that is depending on the newcomers getting a few hours a week to enjoy life outside the office, something Silicon Valley doesn’t seem to do well.
“The area near Amazon has been renamed also: National Landing. What was the point of that? “
Just some H1B mispronouncing National Lampoon……
And the key word is ‘might’. Technology may have changed so much in ten years that Amazon might be out of business. It could happen.
Why place your headquarters in places where rents are already very high?
Common sense would be to place your headquarters in a place with reasonable rents…
For high-skill industries, you go where the hipsters want to live.
For low-skill industries, you go where low-wage workers can afford.
The marginal cost to Amazon for having to pay 20,000 workers an extra $20,000 per year for cost of living is $400 million. That’s not much compared to their trailing (and rapidly growing) OpEx of $77 billion.
In financialized, totalitarian hellholes; large companies need to be close to both the banksters who are handed most of the freshly printed money; and to the seat of the junta itself. Being Chavez’ golf buddy,, and having kids in the same schools as his, mattered a lot more than saving a few pennies on rent, if you wanted to prosper in Venezuela.
If Amazon was primarily a tech company, as in competing head to head on technological sophistication and efficiency of delivering it; costs and lack of red tape would matter. Seattle was perfect for that. A young city with plenty of space, a technologically focused culture on account of Boeing, Microsoft and others, and an upland of conservative rural voters across the Cascades keeping confiscatory state income taxes reasonable.
But now, Amazon is big enough that, going forward, their relationship to the government, and its designated money printers, matter more than technical competence. In totalitarian states, companies always reach a size when this becomes the reality they face. Government can always regulate emerging competitors out of the way, after all. Wouldn’t be a proper totalitarian dystopia if they couldn’t.
Plus the massive subsidies obviously!
It’s not just about rent and real estate.