Amazon’s Move to Millennial Hubs Long Island City and Crystal City Expected to Spark an Apartment Boom

Highlights:

• Long Island City and Crystal City, the neighborhoods selected for the Amazon move, witnessed an y-o-y rent growth of 5.1% and 5%, respectively.
• While LIC is expecting 15,400 units to be delivered in the following years, Crystal City has only 3,100 in the pipeline.
• Both neighborhoods showcase a high percentage of Millennials, 52% in Crystal City and 43% in LIC.
• 85% of Crystal City’s population holds a Bachelor’s degree or higher.
• Nashville, future home to Amazon’s new operations facility, is planning to build 19,400 new apartments.

Following Amazon’s recent announcement to equally split its second headquarters between Long Island City of Queens and Crystal City in Arlington, VA, it’s worth taking a closer look at how this Amazon move will ultimately impact those living in or moving to the two areas in terms of rents and apartment supply. With about 50,000 new employees, are the two locations ready to accommodate this many people as far as rental housing is concerned?

Both neighborhoods have witnessed above-average increases in the monthly rent over the past year. The average rent for apartments in Crystal City is currently $2,387 per month, 5% more expensive than one year ago. Meanwhile, Long Island City apartments are already seeing steep prices, with the average monthly rate at $3,458 as of October 2018, 5.1% above last year’s prices.

LIC and Crystal City will see a significant increase in apartment construction

The Amazon move is bound to have an impact in terms of apartment construction, not only on the specific neighborhoods about to become its second home, but also on the surrounding areas. With a high occupancy rate of 98.2% in LIC, future Amazon employees may have a hard time finding an apartment for rent near work.

However, given Amazon’s choice to move a part of its HQ2 in Long Island City, there’s a good chance that the neighborhood will witness an outstanding apartment boom in the years to come. A total of approx. 15,400 units are under construction at the moment, planned or in a prospective phase. Amazon’s decision is definitely bound to speed up the apartment construction in the area, which is already seeing an increased number of new apartments entering the market.

LIC is New York City’s hottest neighborhood, but also in the U.S., according to a recent RentCafe study, with the most new apartments delivered after the recession. More than 12,500 units in 41 apartment buildings were completed here between 2010 and 2016.

The situation is quite different in Crystal City, where there were no major developments in the last couple of years. Still, the area exhibits a healthy 94.7% occupancy rate, below the national level, which is 95.2%. Approximately 3,100 units are under construction, planned or prospective. But thanks to the transit systems in the Washington metro area, after the Amazon move, future employees would have access to more than 205K rental units currently in the entire metro.

It’s worth noting that both Long Island City and Crystal City have about the same share of high-end or luxury apartments, 58% and 56% respectively. This would give prospective renters a wide pool of choices when searching for apartments.

Moreover, Amazon also decided to select Nashville, TN for the development of an operations and logistics facility, planning to create 5,000 jobs in the area. The average monthly rent for apartments in Nashville is $1,344, witnessing an increase of 5.4% y-o-y. Despite the high occupancy rate of 94.6%, Music City will provide plenty of options for those in search of an apartment, given that 19,400 new units are expected to hit the market in the following years.

Both neighborhoods selected for the Amazon move boast high shares of Millennials and highly-educated population

What type of employees is Amazon expected to find here? As of 2016, more than half of Crystal City’s population is made up of Millennials, 52% to be precise, up 22% from 2011. LIC, on the other hand, has a lower Millennial population of 43%, but the area abounds with Millennial hot-spots.

The median household income in Crystal City is almost double than in Long Island City: $107,478 vs. $54,109. Also, the percentage of people holding a Bachelor’s degree or higher in Crystal City is a whopping 85%, while in LIC it’s about half that, 45%. This data gives a good indication that knowledge workers – the kind of employees needed after the Amazon move – would be found in both LIC and Crystal City.

Methodology:

RentCafe is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the United States.

The report is exclusively based on apartment data related to large-scale buildings containing 50 or more units. Rent data was provided by Yardi Matrix, a business development and asset management tool for brokers, sponsors, banks and equity sources underwriting investments in the multifamily, office, industrial and self-storage sectors.