How Amazon’s HQ2 Could Affect the Price to Rent in Minneapolis
Amazon said Monday that 238 cities and regions within the U.S., as well as Canada and Mexico, have submitted proposals to become the online retailer’s second headquarters.
Many experts believe Minnesota’s chances of securing the campus are slim, which may be positive news to some locals, particularly those concerned about the Twin Cities housing market.
The addition of Amazon’s HQ2—estimated at $5 billion in construction costs—and its 50,000-person workforce would likely spike the cost to rent an apartment or buy a home in the metro area.
One early analysis, conducted by apartment listing aggregator Apartment List, suggests the price increase for Minneapolis renters could be an additional 1 percent annually, amounting to $8,700 in extra rent costs over a 10-year span.
Of the 15 cities analyzed by Apartment List, Minneapolis landed in the middle. Cities such as San Jose, California and Raleigh, North Carolina could see significant upcharges in rent—up to nearly $30,000 extra over a decade’s time—while major metropolitan areas like Chicago or Dallas could expect slight increases, or less than $5,000 over the same timeframe.
“As a moderately-sized metro experiencing relatively slow workforce growth, the Amazon HQ2 represents a large jump in job creation for Minneapolis,” said Apartment List in its report. “The metro would be able to speed up construction, but not enough to prevent some rent increases.”
Seattle knows firsthand how the presence of Amazon can affect apartment and condo prices. The city, which is home to Amazon’s original headquarters, has seen the price to rent jump 47 percent in the last seven years, according to digital real estate marketplace Zillow.
Likewise, home prices in Seattle have experienced an 83 percent rise in the same period of time, Zillow said. A similar effect in the Twin Cities would be a heavy hit to prospective homebuyers, many of which are struggling to find a house amid record high prices and increasingly limited listing options.