In the eyes of many people Seattle is one of the “hottest housing markets” in the US predominantly as a consequence of massive expansion by Amazon in recent times. The fact that the online retail giant has effectively called time on medium to long-term expansion in Seattle caught many by surprise. The company has announced plans to create an “equal” head office elsewhere in the US which makes perfect sense from a business point of view – but what impact will this have on Seattle real estate prices?
When you consider that a record 9000 new Seattle apartments will be made available this year, predominantly as a consequence of Amazon’s continued expansion in the region, pressure on rental values will eventually reduce in the medium to long term. However, concerns about the short term drop in the market may well be overdone because currently there are around 6500 Amazon job openings still to be filled.
New office space
While the company has effectively placed a ceiling on future expansion in Seattle it is worth remembering the company has already committed to 12,000,000 ft.² of office space in Seattle by 2022. At this moment in time the Amazon campus is only two thirds complete which indicates a further 4,000,000 ft.² of office space still required. This puts the company way ahead of any other employee in the region and with many of the new apartments and offices required not even under construction yet, there is still a long way to go.
The fact that in recent years Amazon has often taken more office space than the rest of the market combined perfectly reflects the region’s dependence on the online giant.
It is easy to forget that while Amazon has put a ceiling on future expansion plans in Seattle it will still have an enormous footprint in the region going forward. Businesses which have grown to be dependent on Amazon, such as restaurants, shops, etc will not see any reduction in business although there may be limited growth in the medium to long term. Whether this will coincide with a period of consolidation amongst the local business community remains to be seen but Amazon will still be responsible for enormous local spending.
We know that real estate markets respond well to an increase in local employment and there is no doubt that Seattle has benefited from massive investment by Amazon – and spending by its employees. Even though the announcement of a ceiling in expansion plans may be a reality check for those who expected Amazon’s expansion to continue indefinitely, it will still play a major role in the local business arena and real estate market.
It is also worth noting that companies such as Amazon attract new businesses and new investment opportunities. The overall direct and indirect impact of recent growth in Amazon’s Seattle operation is difficult to quantify but there is no doubt it has been huge. While long-term increases in rental accommodation may be more modest than those experienced in recent times it would be unfair to play down the continued impact of Amazon in Seattle and the surrounding area.