HQ2 Contenders: The Multifamily Factor
The development pipelines for Amazon’s Top 20 show who’s ready, who’s already booming, and who’s not prepared
Let’s be frank: The cities that Amazon has selected as its top 20 contenders vary considerably, offering disparate advantages and disadvantages. The urban expanse of Chicago provides unique benefits that rural Northern Virginia or little Boston cannot match; but, to be sure, the Second City is not without drawbacks. The differences between 20 cities are manifold, so we thought it pertinent to critically examine these differences.
One particular element of interest was the state of multifamily development within each of these markets. In less than a decade, Amazon transformed South Lake Union and Downtown Seattle with new office complexes, a transformation that has been matched by multifamily development within walking/biking distance.
What does the development pipeline for top HQ2 contenders look like at this moment? While any selected city would likely have their multifamily market go into overdrive, it is worth first understanding the proposed delivery plan up until 2020.
Large metropolitan contenders like New York City and Los Angeles have extremely deep pipelines that correspond to their size — yet these are also the cities that have the highest rent and cost of living premiums. Cities like Nashville and Denver are already in a multifamily growth spurt; units under construction already near 10% of total inventory. And then there are cities like Indianapolis and Pittsburgh whose markets are still relatively nascent, thus enabling considerable untapped potential.
Many questions remain. Which cities have land that is still bountiful for multifamily development? How might local laws and policies affect the scale of new construction in these cities? Would a large city with a low cost of living (e.g. Chicago) be more capable of absorbing Amazon than a smaller, blank canvas city?