If Toronto is successful in its bid to become the home of Amazon’s second headquarters, rents and home prices in the city will likely get a boost, Zillow, a major stateside real estate company, suggests.
Recently, Seattle-based Amazon announced that Toronto was among 20 North American cities—and the only Canadian city—that it was considering putting down roots in after receiving 238 proposals in response to a call for proposals.
“Through this process we learned about many new communities across North America that we will consider as locations for future infrastructure investment and job creation,” says Holly Sullivan, an Amazon spokesperson, in a news release.
In the release, Amazon outlines plans to invest more than $5 billion in its new headquarters, which it expects it could accommodate up to “50,000 high-paying jobs.” Amazon expects the site selection process to be completed later this year.
With no decision made yet, Aaron Terrazas, Zillow’s chief economist, weighs in on one of the Ontario capital’s advantages in terms of attracting billionaire Jeff Bezos’ e-commerce giant and the economic gains that can come with it. “Canada’s leading business hub… offers a welcoming regulatory climate for the tech talent that Amazon will doubtlessly need,” Terrazas says in a statement.
The economist says that “as Amazon grew from a startup bookstore into the nation’s dominant retailer, Seattle grew alongside it… Seattle home values have almost doubled and rents have increased by half.” Terrazas does suggest that Amazon alone is not solely behind such appreciation, but he notes how a new HQ is expected to have a ripple effect on a local job market, one of the main fundamentals that drives housing activity.
“Amazon will bring thousands of high-paying jobs to one of these cities, and will boost overall local economic growth—all of those highly-skilled engineers will need doctors, real estate agents, barbers, babysitters and baristas, too.”
To what extent, exactly, could Toronto rents be affected? Looking to Seattle could provide some indication. According to Zillow, metro Seattle’s rents soared 42 per cent from December 2010—about three years after Amazon settled in the city—to December 2017. In December 2017, the median metro Seattle rent was $2,203, up from $1,553 during the same month in 2010.
Terrazas says Zillow, which offers a popular property-search website, has only analyzed related rent growth, but there are plans to look at home values. “Unfortunately, we do not have specific home value projections for Toronto at this time, but we expect there would likely be an impact on home values as well,” he tells Harvey Kalles Real Estate in a statement. “Along with other Canadian cities, Toronto is struggling with housing affordability but it has proven that it has a unique capacity to expand supply to meet the housing needs of newcomers,” he adds.
Photo credit: Amazon
