DENVER – If Amazon selects Denver for the location of its second North American headquarters, expect rents to go up even faster than they already are.
That’s according to a new data analysis from ApartmentList, which looked at the state of housing in 15 large metro areas that are vying for Amazon’s so-called HQ2.
Thursday is the deadline for communities to submit their proposals to Amazon and while many cities and states have offered up various incentives and other gimmicks to try to lure Amazon, Colorado officials said their proposal, which includes eight potential locations around the state, focuses on Colorado’s economy, workforce, educational institutions, infrastructure and quality of life.
Amazon’s HQ2 would add 50,000 employees and tens of thousands of other jobs in construction and other fields, the company estimates, and some cities are better positioned to handle that influx of new residents than others.
To measure that growth’s effects on rents in each metro area, ApartmentList looked at things like current vacancy rates, average number of building permits issued per year, historical rent growth and current median income and rent prices.
In Denver, rents rose 52 percent between 2005 and 2015, according to ApartmentList, for an average increase of 4.8 percent per year during that 10-year period. If the city lands Amazon’s HQ2 – and some have said that’s a very good bet – ApartmentList estimates Denver can expect to see rents rise by an additional 0.8 to 1.1 percent per year.
That estimate is based in part on the fact that Denver already has a supply-and-demand problem when it comes to housing. The citywide vacancy rate is 5 percent and the city is adding more jobs than housing. Add tens of thousands of new people to the mix, and that’s only likely to get worse, even if apartment construction ramps up.
Another factor that will likely contribute to rising rents is the sudden increase in high-paying jobs. While Denver’s median income is a little over $40,000 a year, Amazon estimates average pay of more than $100,000 for the new workers its headquarters will add. That means new apartments built to accommodate those workers will skew heavily toward luxury rentals.
ApartmentList estimates that price increases will cost Denver renters between $7,751 and $11,452 over the course of 10 years.
While Denver would see sizable rent increases, ApartmentList estimates that Raleigh, North Carolina, another top contender for HQ2, would be hit the worst with additional increases of more than 3 percent each year.