The New Amazon HQ and its Impact on Development in Washington D.C.
D.C.’s booming technology sector is making waves in local new development
Washington D.C. and areas surrounding the Potomac River have long been desirable for real estate. Not only is it close to the U.S. capital and government jobs, it has large corporate industries, and a turbocharged technology scene with Amazon’s recent decision to select the nearby Crystal City, VA, as the location for its second headquarters: HQ2.
When the company decided to stop considering Long Island City in Queens, New York for its highly anticipated headquarters, the real estate industry cited that decision as catastrophic for the market. Local developers were particularly vocal, as Brooklyn and Queens expected an influx of tens of thousands of high-income residents that would have sought amenity-rich condos and apartments.
Instead, HQ2 will break ground in Virginia next year, with completion of its first two towers expected for Q1 of 2023. JBG Smith, Amazon’s development partner and the largest developer in the D.C. area, responded to the HQ2 move by planning to re-develop about 2.6 million square feet of multi-family projects across five buildings in Crystal City.
Amazon HQ2’s Impact on Washington D.C. Real Estate
D.C.’s booming technology sector is causing major price escalations in the region, and difficulty meeting demand. The Arlington-Alexandria area, which will be known as National Landing, has become the most competitive real estate market in the U.S. To mitigate upwards pressure on rent affordability, the overall goal for National Landing is to have 4000–5000 new residential units brought to market.
The D.C. region is actually seeing an overall slowdown in new apartment construction, with the exception of the Arlington area. However, strong economic conditions in surrounding Bethesda, Fairfax, Silver Spring and Tysons areas mean we are still seeing large condo and apartment projects moving ahead.
U.S. Census Bureau has concluded that D.C.’s dense urban core is actually thinning out and consistently spreading outwards into these areas as overall population increases throughout the region. Condos still remain the most affordable option for first-time buyers, but competition will remain fierce for years. Even though it will take some time for Amazon’s HQ2 to reach comparable levels to the head office of the Seattle region, competition for homes is at an all time high — listings are often off-market within 2 weeks or less in the Arlington area.
Notable Projects in Washington D.C.
The View at Tysons
Developer: Clemente Development
A major upgrade for the region, this development boasts over 1100 units as well as much needed commercial space including retail, hotel, and office, as well as a performing arts center.
West Half Community
Developer: JBG Smith
D.C.’s largest developer is bringing nearly 1000 units to market in the Navy Yard neighbourhood, directly across from Reagan International and Crystal City. Purpose built rentals, retail and commercial space will revitalize the area.
1900 Crystal Drive
Developer: JBG Smith
JBG Smith has proposed the redevelopment of half a dozen Crystal City buildings. This condo project is one of them, and will boast 790 units down the street from the new HQ2 in Crystal City.
The Wharf Community
Developer: Hoffman and Associates, Madison Marquette
This massive $2.5 billion mixed-use project has seen several condo and apartment buildings constructed along the SW portion of D.C.. The community runs along the Potomac river. Building began in 2017, and is set to continue through 2022 with office, hotel, retail, and entertainment spaces.
Making Sense of New Development in D.C.
Building in D.C. has slowed overall.
However, the inclusion of the nearby Amazon HQ2 has injected new life into certain neighbourhoods. Developers have been quick to begin proposing new developments to meet the upcoming demand of the booming tech sector with housing, amenities, and other community features. While the boom is not as rapid and strong as in Seattle, the site of Amazon’s first HQ, eyes will be on D.C. as we see how the real estate industry handles the sudden growth in coming years.
Do you think D.C. is headed towards an even bigger real estate boom? Let us know in the comments!
