Thanks to a loyal reader of ours, we just read a recent article published on CoStar.com. Joseph Sollazzo a real estate economist examined The Amazon Effect on our local economy. We’ve added some key excerpts from the article below. Seattle is experiencing a historic run in multi-family, retail and office expansion much of which is directly credited to Amazon.com
"From 2000 to 2012, the population of downtown Seattle grew by more than 26%(1), compared to 17% for all of Seattle and only 14% nationally.
Younger folks are driving much of this growth, as the downtown population aged 25-44 has grown four times faster (28%) than the metro average. With its estimated local workforce of 18,000 and potential to expand by an additional 22,000 over the next five years(2), the ramifications of Amazon’s expansion for the local CRE markets are acute."
Seattle is in the midst of an apartment boom unlike anything it has ever seen, with almost 23,000 units expected to be added to the Seattle submarket over the next five years, over 65% of metro wide deliveries.
Many of those new units will be too expensive for the metro’s average renter(3), but with average salaries that are 65% above downtown’s median(4), Amazon employees can hardly be considered average. And Amazon hires are more likely to rent downtown. They tend to disproportionately fall in the 24-35-year-old apartment-renting cohort, want access to urban amenities, and appreciate the mobility of renting.
Using a 3:1 new hire-to-apartment absorption ratio, Amazon’s expansion over the forecast could generate another $722 million of buying power, an increase of 21% across downtown, and as much as 30% in the CBD specifically (see Exhibit 2).