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Amazon’s potential impact on local rentals

On Behalf of | Oct 3, 2017 | Real Estate Investment |

In September, the online retail giant Amazon announced that they are seeking to build a second corporate headquarters and are waiting on competing bids from state and local governments. The New York Times named the Denver area as the best choice for the new headquarters, which promises to bring up to 50,000 jobs and $5 billion in local investments.

Real estate investors recently bought 432 acres of land near Louisville in Boulder County, which they intend to use as a lure for Amazon. Because the Denver area appears to be a top candidate, it is worth examining how Amazon’s could impact the local rental market and greater economy.

How will Amazon impact Denver?

Amazon’s original headquarters is home to 40,000 jobs and is based in Seattle, which has approximately 3.8 million people in its metropolitan area compared to Denver’s 2.8 million people, according to the latest U.S. Census Bureau estimates. According to analysis from Business Insider, Amazon’s presence in Seattle created 53,000 jobs in the local economy, in addition to the 40,000 inside the company, and spurred $40 billion worth of economic activity.

By the basic laws of supply and demand, coupled with an influx of people into the area in search of high-paying jobs, housing and rental prices will inevitably rise as a result of Amazon’s presence. Denver rental rates have increased 2.9 percent in 2017 alone, faster than the rate of inflation.

Good news and bad news

The potential for growth is always good news for real estate investors, but it could be bad news for long-time residents who could find themselves crowded out. According to the Denver Post, rental vacancies in the area are among the lowest in northwest Denver, which is nearest to the aforementioned Louisville land-buy. However, more than 11,000 new units are already on their way to the area.

Whether Amazon makes its second home in the Denver area or not, economic prospects signal growth in the real estate market for the foreseeable future. If Amazon does decide to come, it will be a catalyst for growth and competition, which could put a strain on state and local zoning laws and result in litigation between municipalities and investors.

There’s no telling exactly how the arrival of Amazon could impact local real estate, but the growth will likely be rapid if it does. Investors, like the group in Louisville, are already making moves to secure land for the future and they will continue to rely on real estate and business attorneys throughout the process.