The Ripple Effect of Amazon's Move to Crystal City
ARLINGTON, VA — As the local market prepares for Amazon’s arrival, it is instructive to understand why Amazon was forced to seek out a new location (or locations as it turned out) in the first place: The approximately 40,000 employees in Seattle occupied 19% of all prime office space in the city, according to The Seattle Times. In short, the company’s need for tech talent and space outpaced the availability in the Seattle area.
There is little doubt that the economic benefits for Crystal City will be enormous. Current residents anticipate that real estate speculators will descend upon the area thus driving up housing prices as they look to purchase and lease at pre-Amazon prices. In addition, companies that partner with Amazon or hope to do business with Amazon will, most likely, set up offices there.
“Amazon will take up approximately 500,000 square feet in the area, three existing buildings will be gutted and renovated and future spaces will be developed,” says Richard Rhodes, Managing Principal at Cresa. “In conjunction, Virginia Tech will open up a million square foot technology campus which will primarily support Amazon and it’s friends by providing education and technology support.”
Job-wise, Amazon’s anticipated 2,500 new office positions per year is not a “needle mover” for the region but the “technology companies that follow Amazon will add up to 12,000 new jobs to the economy and that’s a needle mover for the northern Virginia area,” Rhodes tells GlobeSt.com.
For example, “With Amazon in Seattle, the area changed over the initial 10 years as they attracted 100 new tech companies over a three year span,” says Rhodes. “As a result, retail and residential prices automatically trended upwards and everything got expensive.”
Ultimately, the arrival of the online retail giant will be a game-changer for occupiers because the region will lose its soft office market and valuable negotiating leverage.
“Crystal City has historically been one of the softer commercial real estate markets and usually tenants were offered significant packages and incentives to occupy space. With Amazon and ancillary companies coming, those packages will all but go away,” says Rhodes.
Essentially, as companies enter the Crystal City market, it’s the younger professionals who will benefit from the move. “Amazon is the catalyst to shake-up the economy but they are just the tip of the iceberg. It’s the ancillary businesses that will drive a lot of the economy,” says Rhodes. “Amazon will lay down the foundation but the rippling effect on the surrounding economy will last for a long time.”
This article was originally published on GlobeSt.com. Visit the article here.