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Amazon’s Search for a “Prime” Location

 

Amazon’s Search for A New Headquarters: the Search for a “Prime” Location and the Effects on Real Estate

Cities across North America, including several South Florida cities, are engaged in what seems to be a reality show-like competition to be Amazon’s chosen city for its new $5 billion headquarters. From the installation of massive Amazon delivery boxes around the city in Birmingham, Alabama (pictured above), to the vote of the Stonecrest City Council in Georgia to allow 435 acres of its land to be deemed the “city of Amazon” if chosen, the race is clearly on.

Along with the enticing projection by Amazon that the new facility could employ up to 50,000 full-time workers comes the possibility of negative impacts, such as increases in home price and costs of living to current and future residents.

Cities to Amazon: “it’s not you, it’s us”

Amazon has listed its preferences for its headquarters location, such as a suburban or urban area that “thinks big”, where the location will serve as a hotbed for technical talent. The company even has an official “Request for Proposal” for cities to submit their offers. Only seven states did not submit bids for the new headquarters. Little Rock, Arkansas declined to entertain a bid for the headquarters, citing its lack of the population size desired by Amazon, lack of an international airport, and the prospect of increased traffic congestion and constant construction inconveniences for residents. Despite expressing praise for Amazon as a company, Little Rock also submitted their creative video to the company explaining why “It’s not you, it’s us.”

A major concern for the chosen city is the escalation of rent and home price increases. Seattle, where Amazon is currently headquartered, is experiencing the fastest growth rate in home prices nationwide.  A new study forecasts the annual rent increase in the chosen city would be 2% per year on top of the projected target area’s rate growth without the headquarters. A writer for the Seattle Times has warned cities to prepare for “skyrocketing housing costs that push residents out of the home buying and rental markets; worsening traffic gridlock; and an increased gap between the rich, middle class, and poor.”

Whatever city Amazon chooses as its headquarters, that city’s leaders should heed the famous phrase, “be careful what you wish for”.

From the Trenches,

Roy Oppenheim

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