The submissions are in, but what really lies instore for the city that snares Amazon's HQ2?

The closing date has passed so now it’s just a waiting game for the dozens of cities that are vying for the title of Amazon’s HQ2.

The $5billion project will produce a whopping 50000 jobs for its chosen city, so it’s little wonder that 238 proposals were received from across the continent.

Submissions as you would expect came from the large urban centers like LA, New York City and Toronto, to name but a few, but there were also applications from smaller lesser known places like Worcester, Massachusetts and Stonecrest, Georgia.
Such a lucrative deal would surely be a win to any city. A windfall or lottery win if you will, it could certainly cause a seismic shift to some of the smaller cities that are vying for a slice of the Amazon pie!

But the effects for different locations would differ dramatically. Cities such as New York that are home to many white collar workers already may not notice such a major economic change, they will just become more prosperous.   

But the smaller, lesser known locations, that’s where the revolutions could really occur.

There’s no doubt that winning the race to secure Amazon HQ2, would be a massive victory for the successful city but there will definitely be winners and unfortunately some losers.

Whilst many people may focus on the amount of jobs that will be created, these aren’t just any old jobs these are highly skilled, well paid jobs that will ultimately have a knock on effect to the tech industry that is already established in the chosen location (Be it big or small).

For example, Amazon may entice people from their current positions (leaving many jobs vacant.) Smaller companies may struggle, as they are not able to compete with the attractive salaries and perks that come with working for a multibillion dollar company.

It’s not only the jobs created by Amazon though, there will be an increased demand throughout all industries.

Certainly wherever Amazon decides to open HQ2 will see an influx of skilled and unskilled workers migrating there.

Real estate economists have been analysing the positive and negative effects that could potentially ensue from scoring an expansion of such public prominence.
In the 7 years that have passed since Amazon situated its HQ in Seattle’s South Union neighbourhood, house prices within and in the local vicinity have increased by a whopping 83% and rentals by 47%.

For the first time on record one of Seattle’s most sought after neighbourhoods, homes sold for an inflated price of over $1 million. The average house price in Seattle sits around $700,000, twice that of Chicago’s $306, 750 for example. The high prices have increased in line with the influx of tech jobs and the knock on effect this has had on increasing average wage in the city. 

The online retail giant estimates there will be 50,000 high- yielding jobs allocated to the successful city and whist this does not automatically translate to 50,000 new homes built ( a huge majority of workers will already live here) , there is little doubt that the real estate market will see massive movement.

Home owners could be in a great position as they can potentially cash in on the opportunity and sell up, whilst the area is in high demand.
Those renting however may not be so fortunate. Increased rents may price lower income earners out of the market, forcing them to move into even more remote areas in the outer suburbs with less job opportunities.
Also those looking to break into the housing markets (That aren’t lucky enough to gain employment with Amazon) may struggle to get on to the first rung of the property ladder.
The commercial real-estate sector will also be impacted. Amazon takes up approximately 8.1 million Sq Ft of commercial space shared over 33 offices in Seattle, totalling a staggering $4 billion. Seattle Times research compares the largest footprint by both dimensions and % occupancy of 1 company in any individual city. In the past 3 years, Amazon has increased occupancy levels from 9% of the city’s prime work space to 19%.

This kind of change brings about risks of its own. The settlement of Amazon in Seattle also led to other larger tech firms basing themselves here, which is fantastic as the city can boast a pretty incredible talent pool, but putting all your eggs in one basket and relying on a small number of clients all within the same industry sector is never advisable. In the short term though the city can benefit from a rapid income increase and the need for high quality work space solutions.

Chicago officials, believe that for each dollar Amazon contributes to operations and construction, an extra $2.72  would be generated for the local economy through the expansion of service industries. These predictions are based on the finding of World Business Chicago, the city’s economic-development group.

So whilst the Amazon jury is out and deliberating who the lucky winner will be, they can enjoy the added exposure that this huge deal will bring and they can revel in all the incentives that are coming their way. From the Empire State Building being lit in Amazons colours, to a 21 foot Cactus. Every USA business page is talking about who is leading the race. Who will win? Watch this space!