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What Does Amazon’s Move to the D.C. Metro Really Mean for Our Real Estate Market?

You’ve heard the news: Amazon is coming to our region. Earlier this week the tech giant confirmed they will build one half of their new headquarters in Crystal City, and the other half in Long Island City, New York.

Amazon’s news arrives as a slight departure from their original plan to build the entire HQ2 in a single location, but it still has big implications for our region’s residential and commercial real estate markets.

In this article, we will explore the likely impact of Amazon’s coming arrival in Crystal City, and what opportunities it opens for investors and developers within our market.

Amazon’s Impact: Our Initial and Adjusted Predictions

We first wrote about the impact of Amazon coming to our region back in February, in our original post titled “Why D.C. is the Likely Home for Amazon’s HQ2 (and What that Means for Our Real Estate Market”, and then, again, in our follow-up post “Is Our Apartment Market Ready if Amazon Chooses D.C. for HQ2?

In those pieces, we outlined the impact Amazon would have on our region. This impact included:

  • A starter investment of $5 billion in construction and growth of their campus
  • Tens of billions of dollars of additional investment in the surrounding community
  • 50,000 new high-paying ($100,000+ salary) jobs
  • An additional 150,000 – 200,000 supplementary jobs
  • A slight increase in average apartment rents (+$138/month) and demand for apartment production (+2,600 additional apartments per year)
  • A large increase in demand for homes (60% of the high-income employees, or 30,000+ new residents, are projected to be homeowners)

The news that Amazon plans to split their HQ2 in two simply halves these projections. They have now announced they plan to invest approximately $2.5 billion in developing their Crystal City campus, to staff it with 25,000 high-paying jobs, of which approximately 15,000 are projected to be home buyers.

While these numbers are lower than Amazon’s initial plan, Amazon has also announced news of additional development in our region. The company plans to build a new 600,000 square-foot data-center in Northern Virginia, as well as a new Amazon Web Services campus in Herndon, Virginia (both of which are independent of their HQ2 development).

Overall: These announcements represent huge short-term developments, they signal Amazon’s long-term commitment to developing our region as a tech hub, and they confirm substantial incoming change (and opportunity) within our real estate markets.

Here’s what we know, so far, about these incoming changes and opportunities.

Going Beyond the Fluff: The Likely Impact of Amazon’s Crystal City HQ2

Immediately following Amazon’s announcement, most of the discussions surrounding the tech giant’s arrival have been frothy, to say the least. We’ve mostly seen sensational news stories, including:

  • Crystal City’s largest real estate developer is pulling a huge volume of units off the market and brokers are already raising condo prices by over $20,000 a piece.
  • Country, state, and city governments plan to invest nearly $800 million to improve the infrastructure in and around Crystal City.
  • Members of the real estate community are working hard to drop the whole “Crystal City” name and rebrand the neighborhood and its surrounding area as “National Landing”.

True as they may be, these news stories don’t give a concrete picture of where you may be able to seek opportunity in this new era of investment and development. To find that, we’ve dug a little deeper into Amazon’s needs and the current state of our market, and teased out a few clear, immediate areas of impact from Amazon’s move.

Here’s what we found.

  • We expect a big shortfall in housing for Amazon’s new workers. Right now Crystal City’s residential pipeline is only about 1,200 units. That’s not nearly enough to house the 25,000 new high-paid employees, and 100,000+ supplementary employees coming to our region of the next few years. A substantial number of these new residents will likely live in Arlington, D.C., or another nearby metro hub, but that doesn’t change the equation much. We’ve already experienced a multi-year gap between supply and demand. This gap will increase faster than expected in the coming years.
  • We also expect a shortfall in commercial space. Right now 22% of Crystal City’s existing office space remains vacant. That’s not enough to fill the 4 million square feet of office space that Amazon’s new campus will require, even given the fact Amazon plans to place some of their campus in Pentagon City and Alexandria. (And that’s to say nothing of the commercial space required for the supplemental businesses that will be coming to our market as well.)
  • Prices for both will see substantial increases—even beyond what we’ve seen in recent years. Consider this simple fact. In our red-hot real estate market, home prices in Alexandria have increased by 15.5% over the last five years. During this same time, home prices in Seattle have skyrocketed by 73%. We are not implying that home prices in the D.C. metro area will grow by a similar amount in the coming years, but it is clear that the presence of a large player like Amazon opens up even greater opportunity for price increases than we’ve seen in our own hot market.

As interesting as each of these areas of impact are on their own, when you review them as a whole, one central theme becomes clear.

How Amazon’s HQ2 Will Really Impact Our Market

Amazon’s decision to place half their HQ2 in our region is being touted as the start of a total transformation of our market. But when you strip away the hype, you see that Amazon’s decision will simply accelerate trends we have already witnessed for years within our market.

Amazon will accelerate our move to a younger, wealthier, and better-educated population…

It will put greater strain on our limited residential and commercial inventory…

It will drive prices even higher…

And it will create an even greater demand for real estate investment and development.

Anticipating this, we have already begun to finance and assist in the development of substantial new developments in key areas of the region. We have just announced our partnership with SGA Companies to develop the former Frager’s garden center in the Capitol Hill’s Historic District, and build it into The Rushmore: a 117-unit luxury mixed-use development.

In addition to the Rushmore, we have a number of additional projects which we are excited to announce, which will help begin to fill the huge gap we now see on the horizon due to Amazon’s official announcement.

Yet, we acknowledge that these new developments simply will not be enough.

To accommodate Amazon’s HQ2, we will need to ramp up development far beyond any regional projections produced over the last few years. And we can only do so in partnership with you. Whether you are an investor or a developer, if you have any interest in joining this effort to welcome Amazon, its 25,000 new employees, and the 100,000+ new supplementary workers who will soon call our region home, then contact us today. Email us at, or call us at (202) 713 9072 today, and let’s discuss how we can best work together within this exciting, accelerated evolution of our market.