Of all of the US cities on Amazon’s second-headquarters shortlist, Raleigh, N.C., would need to build the most rental units each year to keep up with the demand, according to an analysis HotPads, a Zillow-owned apartment- and home-search platform, released Wednesday morning.
To keep rent inflation at current levels, Raleigh would need to increase the number of rental units available by about 23 percent each year, which equates to building about 2,520 annually. Columbus, Ohio, and Nashville follow Raleigh on the list of cities that need to build the most rental units relative to current levels to accommodate the new demand and keep rent growth steady.
If Amazon selects the Boston metro area, it would need to build about 4.1 percent more rental units — or around 2,720 — each year to keep rent growth steady. Typically, Boston has about 65,600 available rental units on the market each year. The Boston metro area, according to Zillow, includes Suffolk, Middlesex, Plymouth, and Norfolk counties, in addition to Strafford and Rockingham counties in southern New Hampshire.
Amazon’s second headquarters is expected to bring 50,000 jobs to the chosen city, primarily in the management, software development/engineering, legal, accounting, and administrative fields. Based on the homeownership rate in the fields Amazon would be hiring for, HotPads estimated how many renters the new headquarters would be expected to bring in each year and how this influx would affect each metro’s supply of available rentals.
Among the US metros still vying for Amazon’s second headquarters, Raleigh has one of the more affordable rental markets. The median rent in Raleigh is $1,470, up about 3.4 percent over the past year. Population wise, Raleigh is the smallest metro still under consideration and typically has about 10,800 available rental units on the market each year.
If Amazon HQ2 went to Columbus, the rental supply would need to increase by 22.1 percent to keep rent growth steady, which equates to building about 2,480 units a year. Nashville would need to increase its supply by 15.2 percent a year, or 2,000 additional units. The median rent in Columbus is $1,410 a month, and the median rent in Nashville is $1,505 a month.
“An influx of new residents will inevitably influence the rental market, particularly in smaller markets like Raleigh and Columbus,” said Joshua Clark, an economist at HotPads. “Both Raleigh and Columbus have seen remarkable growth in recent years, but if selected, they’ll have to undergo the most dramatic building boom to accommodate Amazon HQ2 and keep rent inflation at current levels. However, finding available land has been a recurring issue for both Amazon and housing developers in Seattle — so areas with more buildable space like Raleigh and Columbus may have an advantage when it comes to building for Amazon’s future. No matter which city is chosen for HQ2, planning in advance will be critical as developers, city officials, and renters adapt to a new normal that includes a strong and ever-growing tech workforce.”
Among the US metros on Amazon’s shortlist, New York City would see the smallest impact on available rental inventory. New York City typically has about 213,200 available rentals on the market each year and would need to increase its supply by just 1.5 percent a year.