Boom or Bust - Riding the Amazon HQ2 Wave

By Christopher Levarek

Much of the hype of late regarding the next real estate boom market has hinged for many on the choice of Amazon with regards to the location for their “2nd” Headquarters or HQ2. With over 20 candidate city locations, expressed over the 2018 year, many investors looked to any of those locations as a possible new target for new real estate ventures.

Amazon HQ2 being developed in a city would mean higher demand for jobs or lower unemployment, more people moving into said city to meet the job demand and growth of other local businesses to meet population growth needs. For the real estate investor, all these possibilities meant an increase in demand for real estate opening up a number of opportunities.

New York

After a year of debate, Amazon expressed that New York City and North Virginia would be the locations for Amazon HQ2 in November 2018 .

However, Amazon ended up cancelling said plans for developing in New York City almost 5 months later in early 2019. This most assuredly left many businesses and real estate investors scratching their heads and/or sustaining possible losses for acting too quickly to proactively prepare for the projected market growth.

This was a major lesson for all investors on investing based on supposed business intentions. Highly successful and proven real estate investor Joe Fairless of “The Best Real Estate Investing Advice Ever Show”, covers this topic well in a recent blog aptly titled, “Real Estate Investing Lesson From Amazon’s New York HQ2 Cancellation”.

A Different Story: Northern Virginia

The other side of the coin is of course, those investors who chose Northern Virginia and not New York as their investment market to pursue based on the earlier Amazon decision. In April 2019, the world’s largest online retailer proceeded with establishing its HQ2 in Crystal City, Virginia which is part of Arlington, Virginia. According to Amazon’s plans, it is estimated that the new HQ2 will create over 25, 000 jobs with an average wage of over $150,000.

As can be expected with such a forecast, a recent Redfin article showed that home prices, as of May 2019, are up nearly 18% in Arlington, Virginia and houses are selling in 6 days or less. The median sales price for a home is at $655,000 and housing supply was down 41.8% since the previous year. We can only expect the real estate market and home pricing to shift even that much more as Amazon further progresses with the HQ2 design and buildout.

In Final

Picking the right market can be vital and coupling market strategies with possible upcoming shifts or opportunities can be downright game-changing. However, we recommend to always choose to invest based on a multitude of factors and look to not invest in real estate based on gambles. Investing on chance will more times then not end poorly. As always, Invest Smart!