Amazon recently made things official, as they announced their selection of two cities for their future headquarters locations: Crystal City, just outside of Washington D.C. in Virginia, and Long Island City, a section of Queens, New York. The announcement followed fourteen months of speculation, as Seattleites braced themselves for how the move may impact the city’s future and market experts predicted how it may shift Seattle’s strong housing market. As King 5 News recently reported, “back before Amazon’s second headquarters was split in two, there were some who believed the announcement would lead to a drastically different housing market in the Greater Seattle area.” Now that there are two HQ2’s in the picture, the impact has weakened.
According to King 5, past exclamations of an “extreme” and “less extreme” scenario option, which would have seen hundreds of Amazonians packing up for HQ2, have given way to the realization that the grass won’t necessarily be greener on the other side. The two planned east coast campuses are each projected to occupy 4 million square feet to start, which is equal to the company’s 4 million square foot expansion already planned for the Emerald City.
What’s more, is that it is not inexpensive to live in their Virginia or New York, as regions near both HQ locations already boast high home prices, not to mention the state income tax that homeowners in Washington state do not experience. That doesn’t, however, mean that there is not interest in these cities. According to King 5 data, “views of homes for sale in Long Island City were up 1,049 percent compared to a year ago, and views in Crystal City were up 217 percent.”
Dean Jones, owner and chief executive officer of Realogics Sotheby’s International Realty has been closely following trends in Amazon—and the local tech industry at large—since the initial HQ2 Announcement in September 2017. Just before the official HQ2 destination selection in mid-November 2018, Jones outlined what he called the Amazon Pause: would-be buyers (many employees of the e-commerce giant) were holding off on the official HQ2 selection before making a real estate purchase. He also cited Amazon’s fluctuating stock, which stands as a wealth generator for many Seattleites. After reaching a staggering $2,040 per share in early September, stocks fell to $1,530 by the end of October. Though they have recovered somewhat since then, Jones said a 25 percent correct in an investment portfolio can certainly curb enthusiasm for making a move for some.
As Jones and other predicted, the two new headquarter locations will serve as additions to Amazon rather than competitive with Seattle. By splitting HQ2 into two separate campuses, Amazon is expanding via satellite outposts as opposed to building a bigger (or better) version of its current Seattle headquarters.
“This effectively resolves fears that Seattle’s rising star may someday fade as less expensive markets draw jobs away,” Jones said. “I don’t find Long Island City or Crystal City to be particularly compelling for Seattleites or a bargain.”
In addition, Amazon aside, the technology sector is a major contribution to the local economy in Seattle and the Eastside, as RSIR recently outlined in a special report entitled Trendlines vs. Headlines. Jones calculated the following aggregate tech and economic expansion in the region:
Seattle Tech Crunch
Amazon now owns twice as much office space as it did in 2016 and will reportedly occupy 15 million square feet of office space throughout downtown Seattle with current commitments.
Apple is expanding within Two Union Square with more than 70,000 square feet to office 500 employees. (Rumors persist that it is making offers on larger office space, as well.)
Google continues to expand in South Lake Union—with 5 buildings either under construction or in planning—comprising nearly 1 million square feet of office space with occupancy expected by early 2019—the downtown Seattle campus could employ more than 4,500 people.
Facebook has opened a new campus at 1101 Westlake, in addition to other leaseholds in South Lake Union, with current capacity for 3,000 employees. The social media giant recently applied for permits for Oculus expansion of more than 60,000 square feet of office space in the Home Plate Center near Safeco Field in SODO. It’s presumed the company leased all 124,000 square feet of the available space, but is merely building out the first half at this time with future plans to grow into the remaining space.
F5 Networks has leased 516,000 square feet in a new office tower (now called F5 Tower) with an estimated 1,500 employees and room to expand. Excess office space is temporarily being sublet and attracting other employers.
Expedia plans to relocate its Bellevue headquarters to Interbay (Seattle waterfront) in 2019 in what may eventually comprise of 1.9 million square feet of office space for approximately 8,000 employees (recent indications suggest the company will moderate its growth in measured phases). Many Bellevue-based employees will either relocate to Seattle or face an arduous commute.
WeWork Northwest continues to expand in the Seattle region and is eyeing a total of 2 million square feet of office space in the greater Seattle area with new commitments in the World Trade Center North building and a 36-story tower being developed in Belltown (this tenant is critical for future growth in tech as many startups are incubating in co-working environments).
Martin Selig Real Estate just announced commencement on two speculative office projects without any tenant preleases at 400 Westlake Avenue in South Lake Union and at 1015 Second Avenue – combined the projects will deliver 400,000 square feet of Class A office space by 2020.
Eastside Tech Crunch
Amazon occupies one office tower in Bellevue with 2,000 employees and plans for another with the potential of adding another 2,500 employees by 2020—that’s about 10-percent of the regional headcount.
Vulcan Real Estate is planning 3 million square feet of office space—likely to target additional expansion of Amazon and other tech users. This developer is very close to tech growth and their commitment to Bellevue is a strong signal of additional tech expansion in the region.
Tableau Software has preleased 180,000 square feet of Kirkland Urban for occupancy in 2019.
Facebook will reportedly develop 650,000 square feet of office space in Redmond and along Willows Road for their Facebook Reality Labs/Oculus campus, according to public records.
Microsoft is doubling down on its own campus rebirth with a multi-billion-dollar expansion that could office upwards of 8,000 employees. The direct connection to LINK light rail means Microsoft employees could choose to live in downtown Seattle or downtown Bellevue and enjoy reasonable commutes to Redmond.
SRM is planning a 136,000 square foot building adjacent to Google’s Kirkland campus, likely for Google’s continued expansion.
Rumors persist about expansion of Alibaba and other international tech companies seeking growth in the region (including potential leases at Southport on the Renton waterfront).
While not tech-oriented, Costco Wholesale recently announced plans to expand its Issaquah headquarters by 1.2 million square feet with room for 4,000 employees. Again, eventual LINK light rail service to Issaquah affords employees the option of living in an urban market or commute by train to work.