How Large Companies Could Affect the Housing & Commercial Market in DC, Part 1

Posted by Bobby Montagne on Oct 3, 2017 2:54:57 PM
Bobby Montagne

When a large company moves into any area, shifts in the housing market are bound to take place – generally for the better. Recently, Amazon announced that they were on a nationwide hunt for the home of their next large headquarters, dubbed HQ2, and while many cities are expected to submit proposals to the ecommerce giant, many residents of Washington, D.C. have their fingers firmly crossed that HQ2 will be breaking ground nearby. Could Large Companies Affect The Housing & Commercial Market In DC

Below we examine three reasons in which Amazon HQ2 could be a huge boost to any region.

New Companies Mean New Jobs

One of the biggest (and yes, most obvious) benefits of a new company moving into town is that new jobs will follow. First, the new jobs will be related to the construction of the new building and the surrounding infrastructure. Then, job positions will need to be filled by employees of the actual company – but in both phases, the more people that are employed, the better. In some cases, these jobs may be filled by current employees that are relocating to their new space, but the majority of the jobs are typically new positions that are filled by current residents (or people who are willing to move to a new area for their new career). Depending on the size of the company, hundreds or thousands of new jobs may be created, but in the case of Amazon HQ2 we’re looking at 50,000 new jobs. That’s larger than the population of some towns and so it’s expected that the jobs will be filled by people from the surrounding communities as well as people from all over the country who are willing to relocate.

All of this new hiring – in both the construction phase and the long-term phase – means that there will be more money coming into the surrounding communities. Current residents may see a pay increase in their new role which will give them more disposable income, while the new residents moving in will be bringing in previously untapped revenue, both in the form of municipal taxes and utilities, as well as in personal expenditures for basic necessities (groceries, gasoline), retail, and entertainment.

Infrastructure Improvements

Depending on how large a new facility is, and how many people might eventually make the move to a new area, there may also be improvements made to the local infrastructure, such as a new stop on local transit or perhaps a solar field installed for more electric efficiency. Expect cable and internet companies to expand their reach as well as they fight for the business of new customers, along with roads to be paved (or repaved… or built entirely!) to support the new residential and commercial developments that will follow a large company’s new presence.

Of course, it’s also likely that in addition to infrastructure improvements there will also be improvements and developments in retail as well. In the case of Amazon HQ2, with 50,000 new jobs being created, it stands to reason that big box shops will develop a presence (or increase what they already have) in the area, as well as grocery stores, chain and fast food restaurants, mainstream retailers, and specialty shops.

Property Values Increase

Overall, as more disposable income moves into an area, and infrastructure is improved, property values will increase as well. In some cases, there may be a development boom, with new residential and commercial buildings going up quickly to support the population increase. In other cases an area may see large improvements to existing residential homes since the new residents have more disposable income and are either used to a higher standard of living, or just have more buying power with their new positions.

If Amazon HQ2 does make the move to the Washington, D.C. area, it will be an amazing opportunity for real estate investors – whether they’re on the commercial side or the residential side – to make some big deals. For more information on how to work with Walnut Street Finance and to download our Executive Summary, click here.

 

 

Topics: Real Estate, Investment Strategies

Bobby Montagne

Bobby Montagne

Bobby Montagne is a real estate entrepreneur with three decades of experience in commercial and residential property development, finance and sales. Having successfully overseen $15 billion in career transactions, he is among an elite class of real estate innovator that has consistently delivered high quality returns to partners and investors.

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