In Amazon’s hometown, Seattle, the growth-hungry e-commerce juggernaut has had a measurable impact on housing costs. That doesn’t always sit well with Seattleites who lived in the city before the Amazon boom. High housing costs can also be a recruiting issue, though Seattle is still far more affordable than the Bay Area where many other tech titans are located.
Related: Amazon narrows HQ2 search to 20 cities, moving to next phase in contest for $5B economic prize
Still, Amazon’s experience in Seattle and desire to attract top talent could make housing affordability a factor as the company decides which where it will locate HQ2, the $5 billion second headquarters announced last Fall. If Amazon is looking closely at housing costs, Chicago, Pittsburgh, and Columbus are the best bets, according to a new analysis from Trulia.
Trulia, a real estate website under the Zillow Group umbrella, looked at housing affordability, housing inventory, and “Amazon’s own prerequisites” to come up with those three cities. Trulia’s chief economist, Ralf McLaughlin, analyzed affordability and price data from the site’s inventory and looked at the quality of each city’s graduate-level computer science and economics programs.
“While it wasn’t explicitly included in their list of preferences, Amazon did include guidance in the application process that they were looking for ‘diversity of housing options, availability of housing near potential sites for HQ2, and pricing’ as well as cost-of-living data,” McLaughlin said in an email. “These criteria are tightly correlated with housing affordability.”
A new study by Apartment List predicts that smaller metros, like Pittsburgh and Columbus, would experience higher rent increases than bigger cities, like Chicago, if Amazon HQ2 located there. In Columbus, Apartment List predicts a rent increase of 1.3-1.7 percent, on top of ordinary rent growth, if the city landed the second headquarters. Pittsburgh rents would jump between 1.2-1.6 percent, according to the analysis.
The city that is chosen will have the advantage of knowing Amazon — and 50,000 high-paying jobs — are on the way, something Seattle never had. That city will have the opportunity to grow its housing inventory before Amazon arrives, though an influx of that many well-paid tech workers will likely impact the housing market anyway.
On Thursday, Amazon announced 20 cities that will move on to the next phase of its HQ2 contest, narrowing the field from 238.
“There seems to be two distinct sets of finalists, from the very expensive, cosmopolitan markets, such as Los Angeles, New York, Boston, Washington, D.C., and Toronto, to the more affordable markets with a growing tech sector, such as Austin, Denver, and Pittsburgh,” said Trulia’s McLaughlin. “My bet is that the latter have a better shot at landing Amazon HQ2 than the former.”