Miami leaders would love to see this corporate logo high atop a downtown building as Amazon considers the city for a second headquarters. Should the company bring 50,000 well-paying jobs to the area, expect rents and housing prices to rise even faster. Reed Saxon AP
As leaders of Miami and 19 other cities celebrate their inclusion in Amazon’s short list for a second headquarters, some affordable-housing advocates have a warning: Be careful what you wish for.
Amazon is a force behind Seattle’s tight housing market, where the online giant’s headquarters employs about 40,000 people and dominates downtown’s office market. Amazon occupies as much office space as the city’s other Top 39 commercial renters combined, and its well-paid workforce is credited with helping boost residential rents faster than in almost any other city in the country.
That’s led to some caution about a downside needing to be managed if Amazon comes to town and exacerbates a city’s already challenging housing market.
“An Amazon HQ2 in Chicago would supercharge gentrification in our neighborhoods, just as in Seattle,” labor leaders, including Chicago Teachers Union president Karen Lewis, wrote in a Chicago Tribune essay last fall urging the city to demand a “community benefits” agreement as part of its Amazon application. “Real estate experts predict that pressure on low-income residents in Chicago’s gentrification hot spots will intensify, and even residents in previously non-gentrified neighborhoods would face displacement.”
Worries over rising real estate prices are basically the exact flip side to the enthusiasm for actually landing an Amazon headquarters expected to employ about 50,000 people with an average annual wage topping $100,000. With 50,000 people on its payroll, Amazon would easily qualify as Miami-Dade County’s top employer. That influx of well-paid jobs would boost demand for real estate, too. Higher demand squeezes supply, prompting prices to increase.
“There’s no perfect world where you have great economic growth and super-cheap housing,” said Sean Snaith, an economics professor at the University of Central Florida.
The Seattle area can’t link its high home prices only to Amazon. The online retailer dominates downtown Seattle itself where it occupies or has plans to take over three dozen office buildings. But other major corporate players — including Microsoft, Starbucks and Boeing — give the kind of Fortune 500 line-up that economic-development leaders dream of elsewhere in the country. That’s put pressure on housing prices — great news for property owners, but a challenge for people looking to buy.
Seattle’s experience is the template for predicting what Amazon’s HQ2 could mean for other cities. While big companies dominate certain suburbs — such as Google and Facebook in Mountainview, California — Amazon’s Seattle presence is the largest of its kind in a city, the Seattle Times reported.
Under the headline “Thanks to Amazon, Seattle is now America’s biggest company town,” the August 2017 article stated: “Amazon now occupies a mind-boggling 19 percent of all prime office space in the city, the most for any employer in a major U.S. city.”
Weeks later, Amazon stunned its hometown by announcing plans for a second headquarters somewhere else in the country. For Seattle, the news meant economic anxiety coupled with the possibility of a more hospitable housing market. “Amazon topping out here and growing elsewhere could slow bidding wars for homes as well as the influx of newcomers driving up rents,” the Seattle Times reported.
Rev. Audrey Warren, an affordable-housing advocate in Miami and pastor at the First United Methodist Church, said the Amazon news brought concerns that the city’s struggle to make rents affordable could be getting even harder. But she said the challenges must be addressed with or without Amazon, and that there’s no reason to turn away so many jobs over worries about a long-running problem.
“I think Amazon could be collaborating with other organizations to promote affordable housing,” said Warren, who is part of the Miami PACT advocacy group. “I think it will be great if Amazon comes.”
Ken Russell, a Miami commissioner running for Congress as a Democrat, said residents will definitely face higher rents and out-of-reach prices — but not because of Amazon, which he’s hoping to recruit.
“Miami already has a housing crisis,” he said. “Left to market forces here, the city is getting less and less affordable.”
An analysis by Apartment List predicts the Miami area would see a quickening pace of rent increases should it land Amazon’s secondary headquarters. The rental-listing organization predicts rents will increase about 3.6 percent a year in the Miami area without Amazon. Add in Amazon’s “HQ2” and Apartment List predicts rents would go up another more than half-a-percentage point each year. That may not sound like much, but it would cost the average renter about $7,000 over 10 years.
Still, it’s not as bad as what the analysis predicts for Raleigh, North Carolina, where the housing market doesn’t have the capacity to absorb new residents like Miami does. It ranks first in Apartment List’s roster of HQ2 finalists facing rent increases, with the average renter expected to pay about $15,000 more over 10 years if Amazon calls Raleigh home.
Juan del Busto, a former head of the Federal Reserve branch in Miami, all but scoffed at the idea that anyone should worry about housing prices in relation to Amazon considering a move to Florida.
“Anything that will create jobs is a positive,” del Busto said. “I don’t see anything negative.”
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This article was written by Carl Juste email@example.com and published on The Miami Herald.