Dallas-Fort Worth seems to have a leg up in the Amazon real estate hunt for an HQ2 campus based on the region’s availability of housing stock, says one North Texas analyst.
The region is an easy fit for the HQ2 campus based on the specifications of Amazon’s Seattle headquarters, said Greg Willett, chief economist of Richardson-based RealPage Inc. (Nasdaq: RP), a data analytics firm that tracks the U.S. apartment industry.
"If you consider the tech talent needed and the real estate you need to make the deal with — a site where you could build all this office space and have the available housing in a neighborhood — three areas really jump out at you, and one of those is Dallas," Willett told the Dallas Business Journal.
Along with Dallas-Fort Worth, Atlanta and Washington, D.C. also have the apartment stock and ability to develop additional housing requirements for a would-be 50,000 employees at the build-out of the proposed Amazon HQ2 campus.
In all, North Texas has about 57,000 apartments — or roughly 33,000 vacant apartments in existing properties and another 24,000 apartments that are under construction — available for a major employer, like Amazon, to help fill.
Atlanta also has a ready-to-go supply of about 43,000 apartments — with about 30,000 vacant apartments in existing communities and another 13,000 apartments under construction.
The housing supply in both U.S. metros are also relatively affordable compared with the rest of the nation, Willett said. The average apartment rent in Dallas’ metro is about $1,124 per month, or at a 35 percent discount to a similar apartment in Seattle.
For Atlanta, the average apartment rent sits at $1,144 per month, which offers a similar savings compared with Dallas’ rents.
Washington, D.C. — also a finalist for Amazon’s HQ2 — is one of the top U.S. cities with housing supply for a major corporate relocation. In all, the nation’s capital has about 49,000 apartments, or about 30,000 vacant units in existing properties and about 19,000 new apartments in the construction pipeline.
But Washington, D.C. rents are more expensive than Dallas and Atlanta, with the average cost of an apartment running $1,691 per month. That is still a slight discount to Seattle’s average apartment rent of $1,725 per month.
Other U.S. metros have the supply of apartments, but there are challenges to the supply. In Chicago, the city has about 49,000 units of available apartments, but most of those homes are located just south or west of Chicago’s urban core, and may not appeal to many Amazon employees.
Some of cities, including Austin, Denver, and Philadelphia, could also accommodate an Amazon HQ2 based on housing supply, but the apartment development would need to accelerate to meet Amazon’s long-term needs to house employees for an HQ2. Miami could also accommodate the HQ2, but there is less of a cost advantage for would-be employees.
"The biggest different between some of these locations is the price point and that’s where Dallas clearly has the advantage," Willett said.
Boston, Los Angeles and New York could also be eliminated based on the cost of housing, with Boston and Los Angeles costing 30 percent more than Seattle, and New York rents being double the cost of housing in Seattle.
Other North American markets under consideration, such as Indianapolis, Columbus, Nashville, Pittsburgh, Raleigh, North Carolina and Toronto, would struggle to meet the short-term housing needs of an HQ2 campus because these cities currently have housing shortages, Willett said.
If these smaller cities land the HQ2 campus, he said he would expect a big run on apartment pricing as a result.
If Dallas lands the HQ2 campus, Willett said he would expect housing costs to rise, but it wouldn’t be as big of a spike in costs as it would be in other more expensive or supply-constrained cities.
"Dallas, Atlanta and Washington, D.C. are the three spots where the math seems to work, but it will depend on their priorities," he said. "If you are approaching it from a standpoint of creating an environment somewhere else, I can’t see another list emerging."