Amazon HQ2 sparks apartment gold rush in NYC and Virginia

After big announcement, agents are booked and home searches are surging by hundreds of percentage points

Just one day after Amazon announced it will open a pair of new headquarters in New York and Virginia, interest in the two areas’ real estate is spiking by hundreds of percentage points and prompting a frenzy from investors wanting to cash in on the news.

Amazon confirmed days of rumors Tuesday, announcing it would split its long-sought-after “HQ2” between Long Island City, in Queens, and the Crystal City area of Arlington County, Virginia. Almost immediately, home searches in those two areas skyrocketed, with Zillow reporting a 398-percent year-over-year jump in views of Long Island City listings on Tuesday, and a 435 percent jump in Arlington.

Zillow data shows increasing interest in Long Island City and Arlington. Credit: Zillow

That single-day jump in home searches followed several days of explosive interest in the real estate surrounding the two HQ2 regions. During the period between Nov. 5 and Nov. 10, Zillow subsidiary StreetEasy “saw a 295 percent increase in the volume of buyer searches in Long Island City,” the company told Inman in an email.

Zillow competitor Redfin saw skyrocketing interest as well, including an astonishing 1,049 percent increase in views of Long Island City listings during the week ending Nov. 11, as compared to a year ago. In Crystal City, listing views “were up 217 percent year over year.”

Redfin spokesperson Alina Ptaszynski told Inman in an email that agents in both of the HQ2 locations are “reporting more inquiries from buyers, including many from out of state, who are interested in learning about the areas and purchasing potential rental properties.”

“We have a few listings in the region that have received ten-fold the interest than would be expected at this time of year,” Ptaszynski also said.

Redfin data shows skyrocketing interest in real estate surrounding Amazon’s new HQ2 sites. Credit: Redfin.

The spiking interest in real estate is being driven by Amazon’s plan to create 50,000 new jobs, split between the two HQ2 campuses. Aaron Terrazas, a Zillow senior economist, called those numbers “no joke” in a blog post Wednesday, but added that both regions “should be able to accommodate this growth.”

Mark Lawter

On the ground, agents in both areas were seeing the real world effects of the surging interest. Mark Lawter, a Liberty Properties agent working in the Arlington area, told Inman that he typically gets two or three Zillow leads per week. But on Tuesday alone, he got 19 or 20.

“Literally non-stop my phone was buzzing from 6 am to midnight,” Lawter said.

Lawter has spoken to both investors and would-be homebuyers, including some Amazon employees, who want to “buy before the Amazon tsunami.” That tsumani, however, appears to have already arrived.

“I’ve already seen it in Crystal City,” Lawter said. “Since the announcement, prices have bumped up a little bit.”

Dex Lipovic

Dex Lipovic, a Compass agent who sells homes across New York City, described the situation over the last few days as “shocking” and unlike anything he has ever seen before. In one case that Lipovic described to Inman, clients looking for housing in Brooklyn abruptly abandoned those plans over the weekend and are now searching exclusively in Long Island City.

“People are already throwing out the ‘Silicon Valley of the East’ name,” he said with a chuckle, adding a moment later that “I’m in appointments non-stop.”

Lipovic also said he has suddenly heard from investors he hadn’t spoken to in years, and has seen inquiries from far-flung parts of the globe including Taiwan, Russia, and Italy. And he expects the boom to spread out beyond just the immediate vicinity of the coming Amazon campus.

“It’ll be interesting to see the impact not only on Long Island City itself but on the surrounding neighborhoods,” he said.

Alexis Yoo

Alexis Yoo, an agent at Modern Spaces who also works in the Long Island City area, said “our phones are ringing off the hook” as well. Every agent in the area is “inundated with inquiries” and it’s difficult to get appointments to see anyone or any properties because everything is booked up.

Yoo expects the initial shock of the news, and the resulting frenzy, to die down in the coming weeks, but believes the “overall market will be quite active” for the foreseeable future.

Long Island City has seen a building boom in recent years, with apartment search website RENTCafé describing the area as “New York City’s hottest neighborhood.” Since the recession, it has added 12,500 housing units and has another 15,400 units in the works, RENTCafé said in a statement. According to the The Wall Street Journal, the area had been suffering from rising inventory and cooling sales.

But with Amazon’s announcement, even that massive inventory may not be enough to keep prices in check.

Yoo said that some sellers are now reconsidering listing their properties and may hold out for higher prices down the road when Amazon’s plans begin to be realized. That, she added, could exacerbate an already tight housing market, cutting supply even as demand explodes upward, and drive prices higher.

“A lot of the sellers are pulling back,” Yoo said. “It’s kind of a double edge sword.”

RENTCafé reports that Long Island City already had an occupancy rate of 98.2 percent, noting that “future Amazon employees may have a hard time finding an apartment for rent near work.”

Crystal City has not seen any major new housing developments in recent years, but does have 3,100 units in the works, according to RENTCafé.

Rendering of National Landing in Northern, VA for Amazon HQ2

Rendering of the under-development National Landing neighborhood in Northern, VA, one of two sites chosen for Amazon HQ2. Credit: HQ Nova

Zillow expects rents in and around New York City to rise 1.4 percent beyond what was already expected as a result of Amazon’s announcement. The Washington, D.C., area should see a bump in rental prices of 0.6 percent compared to what was anticipated, according to Zillow.

Though Lipovic has seen interest primarily from condo investors, he said the people who stand to make the biggest profit may be developers. He said he has already had inquiries from people potentially looking to build condos and hotels, though there is also a scarcity of land in the Long Island City area.

“I’m actually going to have to go to specific owners to see if they have interest in selling,” he added.

Those who spoke to Inman for this story described the surge in real estate as a positive thing for the new Amazon neighborhoods that will have lasting impacts. And though it’s unclear exactly when the hype will die down, Yoo said that whatever happens, “It’s going to be exciting times.”

Lipovic also had some advice for anyone looking to get into the market.

“I would act as soon as possible,” he said.

Email Jim Dalrymple II