Amazon, Amazon, Amazon, they’ve been the buzz word in Northern Virginia since they announced in November they’d be moving half of their 2nd headquarters to Crystal City which is now known as National Landing.
National Landing consists of Crystal City, the eastern part of Pentagon City, and the northern part of Potomac Yard. Prior to the announcement if you drove through Crystal City you’d see a lot of office buildings that were barely populated and it’s been that way since 2005. They were once bustling and full but, employees were lost to the Depart of Defense’s Base Realignment and Closure project, better known as BRAC.
It didn’t take more than a day for calls to start to roll in after Amazon made the announcement. Listings that had been sitting becoming stale that were adjacent to Crystal City all of a sudden had a rush of showings and closed prices show sold for more than their list price even when they’d been on the market for weeks. Not everyone is celebrating though. From a different standpoint, there’s concern over this being an area where traffic is already some of the worst in the country and where the Metro system has its fair share of problems due to years of deferred maintenance. 25,000 new jobs are expected to come with Amazon and 22,000 new jobs are expected to come indirectly because of Amazon.
What does that mean for real estate? While there has been a lot of buzz I think the effects will take time. Sure some buyers have already acted quickly and I think there will be some who still do but, not the majority. I’m not going to start quoting appreciation numbers. They’re nothing more than predictions and if one can accurately predict that they probably wouldn’t be selling real estate. The arrival of Amazon’s employees also isn’t going to take place all at once, that’s going to be a several year timeframe.
It won’t just be Crystal City that sees the impact of Amazon because real estate in that area is very expensive. Northern Virginia is expensive in general but, Arlington is especially expensive and not an area everyone can afford to buy in. Looking outside of Arlington and even Alexandria buyers will find prices more affordable and if there’s accessibility to metro I think those areas will also see an impact. Bottom line, not everyone can afford to live in Crystal City nor is there enough housing for that to happen.
Rentals also can’t be forgotten. The activity we’ve seen in Crystal City has been exclusively from our investor clients. Some who bought solely on speculation before Amazon made their announcement and some that bought in adjacent areas (Rosslyn) right after it was confirmed Amazon is coming. With Amazon comes relocation for employees and not everyone is going to be ready or even want to buy particularly if they’ve never been to Northern Virginia. It’s not likely they’ll be ready to commit to buying prior to getting a feel for the area and specific neighborhoods they do and don’t like.
Along with Amazon office space will come residential, dining, and retail space. The goal is to make National Landing a walkable neighborhood and Amazon will start hiring and staffing this year. There are a couple things that are certain, Amazon is coming, it will bring new jobs, and a facelift to Crystal City and parts of Pentagon City and Potomac Yard. As for what it means for how much real estate will appreciate that remains to be seen and I’m not one to speculate. I will be watching the numbers closely and sharing future updates on closed sales and inventory levels along with explaining current market conditions.