Features

Is Amazon the Reason Rents Are Going Up?

Yes, It Is

Is Amazon the Reason Rents Are Going Up?

Mark Kaufman

  • comments (40)
  • Print
+ Enlarge this Image
+ Enlarge this Image
Kelly O
APARTMENTS IN AMAZONIA Some units in this building, a few blocks from Amazon’s headquarters, are as small as 312 square feet and go for as much as $1,300.

It's hard to know how many of the people moving into Seattle's expensive new apartments are Amazon employees. We don't even know how many Amazon employees there are—in the past, the company has refused to tell reporters how many people it employs in Seattle. (As of press time, an Amazon spokesperson responded to a question about the size of its workforce with another question about the "angle" of this story. We said it was about real estate and haven't heard anything back yet.) But after Amazon's stunning purchase of 2.7 million square feet of space in South Lake Union last December, analysts including Kate Joncas of the Downtown Seattle Association were guessing around 10,000 Amazon employees in Seattle and counting.

Property managers in South Lake Union, who would speak only if they were not identified, say they've heard Amazon recruiters bragging that they'll bring in tens of thousands more to live in the city—many of them young college graduates who haven't yet developed a taste for the suburbs. "They paid Vulcan a billion dollars for space they're already occupying?" says economist Matthew Gardner of December's mammoth purchases. "If you take 140 square feet per employee and divide it up, that will give you a number of warm bodies Amazon is planning to bring to Seattle."

That number—2.7 million divided by 140—is around 20,000. And how are these newcomers influencing the city's rental prices?

Between March of 2009 and March of 2014, Gardner says, rental prices in the Belltown/South Lake Union neighborhood (which are considered a single market) have increased by 27.1 percent. On Capitol Hill, rents have jumped 31.5 percent. "Is Amazon's expansion an influence?" Gardner says. "Yes, it is. Any leasing agent in the area would say yes." And because of the way rents are headed in those areas, he adds, "It's going to influence a migration to other proximate, submarket areas."

The Amazon effect is being felt beyond the apartment-rental market. Bidding wars between home buyers push up the prices of houses, which "are a fundamental driver for determining rents" according to Nate Clement, business manager of the real-estate site Estately.com. (Full disclosure: Clement is my brother-in-law.) "We're facing the same nationwide conditions that have created a low supply of homes for sale, and locally there's certainly additional demand from an influx of buyers and renters coming for Amazon jobs," he says. "It seems bound to push prices higher and faster than elsewhere."

Barry Blanton of the Blanton-Turner property management company put it more bluntly in a market report last spring: "The in-city Seattle market is booming with the job growth of Amazon; $3 is the new $2."

Mike Scott of Dupre + Scott Apartment Advisors says it's a little difficult to pinpoint exactly how significant the Amazon effect is—partly because Amazon is so secretive, partly because of the recession between 2008 and 2010—but nobody denies that it's driving rents up.

That's great news for property owners who are vying for Amazon dollars. Building managers and lease agents at all the apartments contacted were extremely cagey—routing repeated calls for comment to corporate offices in Dallas or at Vulcan, Inc. (which might as well be Dallas). None of those calls were returned. But one property manager at Stack House in South Lake Union, which is also managed by Vulcan, mentioned a "preferred employer" program that waived fees and deposits for Amazon workers because the company "creates a high volume" of renters.

Gardner suspects we're reaching a peak in rents that will fall as the apartment market settles out and today's college graduates who want to live close to the action get older and move to the suburbs. "At some point," he says, "Amazon employees will decide family is important and will think about moving out."

What will the rest of us do in the meantime? Gardner says the only real solution is getting our mass-transit act together. "You already see these historic markets—Columbia City, Georgetown—getting a life of their own because accessibility is getting better," he says. If we can improve transit, we can figure out affordable-housing solutions beyond Central Seattle, but we're not moving fast enough. "Transit-oriented development is going to answer this question," he says, "if we get it going. We can wax poetic about light rail, but when? 2024?"

He adds that the various affordable-housing credits—such as the multifamily property-tax exemption—aren't working as well as they should. Andre Chaisson, who is studying film and began looking into the Amazon effect on Seattle's rents for a documentary project, is a case in point. He and his wife, who've never had a problem qualifying for an apartment before, recently wanted to move out of their Green Lake place and couldn't find anything. "We make too much to qualify for low-income housing, but then we can't really get anything else in the city," he says. "Is Seattle going to be affordable to people like us?" recommended

 

Comments (40) RSS

Newest First Unregistered On Registered On Add a comment
40
DAMN straight Annihilate Seattle-axon aka Asshole-azon, is trying to bust Seattle until it's renamed Bezosville. Yep,to the top of the top for Jeffie. NEXT: Godbezos.

Stephanie S
Posted by peopleruineverything on June 10, 2014 at 4:41 PM · Report this
39
Say the Seattle Housing Authority were to buy land outside city limits along the new rail line and built subsidized housing outside city limits and either given to the local jurisdiction or sold to private developers. Our "poor and oppressed" could then be given a two year lease at the new projects for half of whatever they were paying in Seattle and moved by the city.

The housing projects in the Rainier Valley, West Seattle, and Yesler Terrace could be sold to real estate developers and put back on Seattle's tax rolls. Our new tax paying residents could then rent or buy them. Maybe Amazon would like to have a company owned community inside city limits.
Posted by billwald on June 8, 2014 at 7:44 PM · Report this
38
Maybe talk to actual Amazon employees, too? A lot of them aren't newcomers but older Seattle residents.

I had a roommate, last decade. We shared a shitty "cheap" CD triplex apartment. One day, he quit delivering pizza and started taking CS transfer classes at Seattle Central. He got accepted for transfer into UW-Tacoma, moved there, graduated, got a job at a tech firm near Microsoft. That company tanked and he scored a job at Amazon, *back* in the city, where he started.

They're just a large employer. Seattle has several of those. The reason rents are going up is because we're adding more jobs than apartments. As much as the city council likes to trumpet that they've added 20,000 units or whatever, it's not anywhere close to enough.
Posted by Lack Thereof on June 8, 2014 at 10:15 AM · Report this
37
high rents

10% US unemployment rate in construction field

Mexico

please build more housing!
Posted by alfresco on June 7, 2014 at 11:50 PM · Report this
36
@riot gorl +1
Posted by alki444 on June 7, 2014 at 10:11 PM · Report this
35
@16 Uh. Well. Good riddance.

I've lived and worked on Capitol Hill for over twenty four years.

And there have always been lots of families, and old people, and straight people up here. Always. In fact they've always out numbered the gay people exponentially.

Capitol Hill was a tolerant livable place. Welcoming to everybody.

Until intolerant strident assholes like you showed up. You are the entitled interlopers fucking it all up.
Posted by tkc on June 5, 2014 at 4:53 PM · Report this
34
@16 Lucida -
I lived on Cap Hill for six years and saw a huge influx of babies and straight-looking gray-hairs in the population by the time I left. Good riddance, assholes.
Nice! Why don't you just call all the non-gay folks living on the Hill "Breeders" or some other low-brow cut? It's not OK to call gay people "fags" or black people "niggers", but apparently, stereotyping straight people as "breeders" is perfectly fine in certain parts of Seattle.
Posted by Arthur Zifferelli on June 5, 2014 at 2:02 PM · Report this
33
tkc @29: "Kiley, you can't have it both ways. You can't complain about terminal low wages and then complain when a company actually pays people livable wages. Paying all those twenty-somethings that go to your advertisers bars and clubs."

No SHIT! On Monday, The Stranger is all about getting more money into the Seattle economy via the $15/hr campaign; on Tuesday, suddenly more money injected into the economy is a bad thing. And I just love how more money in Seattle via $15/hr DOESN'T raise prices and cause inflation, but more money in Seattle via Amazon workers does.

Its enough to make the steel plate in my head hurt.

Posted by AinWA on June 5, 2014 at 1:53 PM · Report this
32
@30 Not saying it shouldn't be challenged, just pointing out where we are. Its enactment was in response to a failed Seattle rent control initiative in the first place.

As for political palatability, I'm hard pressed to imagine many (if any) elected officials taking the lead on this monster.
Posted by JankyScraps on June 5, 2014 at 1:21 PM · Report this
Will in Seattle 31
@30 for the Nothing is Impossible Nothing win
Posted by Will in Seattle http://www.facebook.com/WillSeattle on June 5, 2014 at 12:35 PM · Report this
30
Rent control is outlawed in Washington state.


So was gay marriage and weed.

But I guess this one thing will be impossible to change, right?

Well. That's that. We might as well resort to demonizing the high paying employers. That'll help.
Posted by tkc on June 5, 2014 at 12:13 PM · Report this
29
@20 Wait. Aren't these the high paying jobs that people desperately needed?

#24 is totally right.

Kiley, you can't have it both ways. You can't complain about terminal low wages and then complain when a company actually pays people livable wages. Paying all those twenty-somethings that go to your advertisers bars and clubs.

Inflation is ALWAYS a consequence of raising living standards. Always.

Rather than bitch about Amazon (or Boeing or Microsoft or Adobe or Google before them), do something about the rents. Make a case for rent controls. Back a plan. This harping about Amazon just makes you look like hypocritical douche bags.

You guys used to whine about how companies like Microsoft being out in the burbs was killing the city with sprawl. Well. Now you're getting the a company with high paying jobs in the city providing the impetus for the density you wanted. What the fuck did you expect?

Now that you're getting the density you wanted (let's forget that The Strangers most vocal proponents for density live in single family houses) you're getting the consequences. It's not up to Amazon to fix.
Posted by tkc on June 5, 2014 at 12:09 PM · Report this
Seattlebcc 28
As predicted I said there would be no "affordable" housing in this town. Ive been here 20 years and the same crappy 600 sq. ft. apartment on first hill that gets a fresh paint "renovation" is now around 2,000 a month a my salary hasn't increased in 5 years. This isn't one companies fault but it is their delusional practice that only bachelor and master degrees are worthy of a decent salary yet the same demographic cant figure out that their computers actually work if they would just turn on their monitors. Government in their efforts to sell Seattle's soul to the highest bidding developer hasn't helped either. Consortiums of faceless investors and landlords screwing it to hard working under paid slaves must really make them feel good- especially when the 15.00 minimum wage hits. Then everyone can afford higher rent, right guys!? Now that most neighborhoods have "stepfordian" multi-use buildings springing up like weeds, the uniqueness has almost been wiped. Have fun Seattle - outside of a year or two, Im out, then you can just be one big crime ridden multi-use slum.
Posted by Seattlebcc on June 5, 2014 at 4:17 AM · Report this
27
Note to 25,23,23......RCW isn't a law it actually means that there has been a change in the agreement...but not a law---we don't have laws, we got RCW for that reason. and that RCW was bought by property owners who rallied money to oppose a rent control measure way back...gave rise to the Tenant's Union etc. And note the exceptions which have given rise to a slew of progressive low-income housing non-profits, mortgage partners and some really interesting developments so....ahem...all is not lost and Rent Control-----the term itself-----those two words, are possibly the only thing that wont be used as a moniker for what kind of new RCW can be presented in the face of the new economics of the region. In fact one could argue fairly effectively that when there is preference given to a renter with predictable income due to their particular employer, that there is a certain element of what you characterized as "illegal" rent control in operation....controls on how much the rent can rise to.....which in the case of the pre approval of renter is bases squarely on a percentage of the income of this preferenced renter so...there ya go.....Rent Control. It's complicated and interesting and worth challenging. And there is no reason why we should consider the state of the rental relationship paradigm here in the Seattle or the region inalterable...............things change and they will.....RCW never did an impenetrable law make....
Posted by katyk on June 5, 2014 at 1:09 AM · Report this
26
San Francisco has rent control and it's still too damned expensive to live in the city. Don't be so sure rent control would solve anything even if it were legal here.
Posted by wait on June 4, 2014 at 9:18 PM · Report this
25
@13, 22, 23 Rent control is outlawed in Washington state.

http://apps.leg.wa.gov/rcw/default.aspx?…
Posted by JankyScraps on June 4, 2014 at 8:54 PM · Report this
24
Damn those Amazon workers and their "livable" wages!
Posted by AinWA on June 4, 2014 at 8:19 PM · Report this
23
The problem isn't amazon, it's that there's no rent control (which has been successfully done outside of the USA), which means any type of corporate success that pulls in high paying jobs is going to spark a bs class war between the upper middle class who can afford rent and the lower classes who can't, all the while the 1% are laughing at us.
Posted by j2patter on June 4, 2014 at 8:13 PM · Report this
22
@13: This.
Posted by El Jefe on June 4, 2014 at 7:35 PM · Report this
21
Uhm, hello? Amazon employees aren't the only ones the get preference in the housing market. Microsoft employees also enjoy waived deposits, etc., because they are viewed as reliable tenants.
Posted by msftie on June 4, 2014 at 5:39 PM · Report this
20
@ 9 and 14: You're projecting. I never said it was "bad" or that the company "sucked." I'm just pointing out the phenomenon—which is great if you're a contractor or property owner and not so great if you're already scraping to make rent. It just depends on where you sit in the local economy.
Posted by Brendan Kiley on June 4, 2014 at 5:24 PM · Report this
19
This is why I bought a houseboat when I recently found out my current old duplex was being demo'd. It was affordable, came with a lease for a liveaboard slip, and with some upgrades will be just as nice as any of those generic, prefab Lego-condos that have been springing up like weeds. Monthly moorage can be an order of magnitude cheaper than monthly rent or mortgage on land.

When Seattle was first settled, poor people who couldn't afford land in the big land-grabs going on at the time just built a shack on a raft and called it good ...
Posted by mgmarco on June 4, 2014 at 4:32 PM · Report this
18
holy fucking high horsey dickwad attitude, @16. seriously, shut the fuck up and stop pretending you are better than "straight-looking gray hairs." jesus, you're an embarrassment to the hill and the inclusive environment it embodies. thank god you left.
Posted by no one you know on June 4, 2014 at 3:54 PM · Report this
lucida c. 17
@15 Look at poorer suburbs for the shittier schools. (Admittedly Amazon employees are less likely to move there.)
Posted by lucida c. on June 4, 2014 at 1:58 PM · Report this
lucida c. 16
I lived on Cap Hill for six years and saw a huge influx of babies and straight-looking gray-hairs in the population by the time I left. Good riddance, assholes. I don't buy the line about college grads moving out to the suburbs either. I think cultural values have shifted and rich white straight people are less afraid of the city while they've learned the value of a walkable neighborhood. They're kicking us out.
Posted by lucida c. on June 4, 2014 at 1:55 PM · Report this
15
@5 says "The schools in the close suburbs are horrible..."

Not sure what you mean by close suburbs, but Bellevue's schools are outstanding, as are Mercer Island's. The Lake Washington, Northshore and Shoreline districts are excellent.
Posted by bigyaz on June 4, 2014 at 1:24 PM · Report this
14
Google sucks because it's located outside in a non-urban setting with little public transportation.

Microsoft sucks because it built its campus on cheap land in the suburbs decades ago.

Amazon sucks because it built its campus right in the city and helped revitalize a decaying neighborhood with new apartments, condos, shops, etc.

So what's the answer, Brendan?
Posted by bigyaz on June 4, 2014 at 12:48 PM · Report this
13
No, the reason rents are going up is do to a lack of rent control.

Get that signed into law.
Posted by LeonK on June 4, 2014 at 12:41 PM · Report this
Eric F 12
What you're leaving out is supply. One of the reasons Seattle remains much more affordable than San Francisco is we have upzoned the central city and have comparatively less penalties for development. As a result, we've built far more housing in recent years than SF has, despite being a smaller city.
Typically, judging by my Facebook feed, the new development gets attacked as a partner of the tech economy. Really, it's the only thing restraining increases in rents and house prices, particularly in older buildings that would be bid up if they were the only options for newcomers.
Posted by Eric F on June 4, 2014 at 12:41 PM · Report this
11
So is this a story about Amazon hiring new employees, increasing rents in Seattle, or Brendan’s agenda for improved mass transit?
Posted by riot gorl on June 4, 2014 at 12:31 PM · Report this
10
PREACH @9!
Posted by no one you know on June 4, 2014 at 12:29 PM · Report this
9
Let me make sure I understand this correctly...

When Boeing tries to reduce labor costs and locates its jobs somewhere other than Seattle, that's BAD.

When Amazon pays amazing salaries and locates its jobs in Seattle, that's BAD.

Can someone please explain to me what GOOD is? Would that be people all making exactly the median income, at a perfectly flat geographic distribution? Is that what we're striving for, uniform mediocrity? Or do people just like to hear themselves complain?

Posted by wait on June 4, 2014 at 12:15 PM · Report this
8
Sorry - link broke:
http://jeffreifman.com/2014/05/12/youve-…

That's 24,669 estimated by year's end.
Posted by reifman on June 4, 2014 at 11:33 AM · Report this
7
Estimates of Amazon's Seattle headcount by year based on NYT source, Amzn annual reports and # of job listings:
http://jeffreifman.com/2014/05/12/youve-… est by end of 2014.
Posted by reifman on June 4, 2014 at 11:32 AM · Report this
6
This is what you wanted, Seattle. You wanted to be like SF. Now you're becoming SF: Overpriced and overfunded tech workers are pricing the middle class out of a beautiful city. This is what your obsession with urbanist growth gets you.
Posted by El Steven http://misterstevengomez.com on June 4, 2014 at 11:24 AM · Report this
5
We just moved up from Portland. One thing we learned is that not only do property managers waive fees for Amazon tenants, they also give preference to Amazon employees. Amazons relocation people know about openings before anyone else and are effectively rented out before they even list. The only way we got our place was a sympathetic agent that gave us an inside track on a house.

I don't really believe the line about college grads moving out to the suburbs to have kids. The schools in the close suburbs are horrible and the far burbs have an unholy commute. Those people will move "out" to West Seattle and Ballard.
Posted by kuangmk11 on June 4, 2014 at 11:19 AM · Report this
4
sure does suck to live in a city that's growing and successful. why can't we be detroit? i hear rent is super cheap there.

but this is basic economics: as the demand for housing outpaces the supply, the cost of that housing increases.
and it's only going to get worse. here's more basic economics:
as the amount of money in circulation increases, say through a 60 percent uptick in the lowest wages, the value of each dollar goes down, meaning you will need more of them to buy the same things. it's called inflation and it's why it takes a bajillion pesos to buy a coke.

Seattle: home of the highest poverty line in the country, but still no program to get people off minimum wage and into actual careers. good thinking!
Posted by the eyeroller on June 4, 2014 at 11:11 AM · Report this
3
Goodbye and good riddance Seattle. Three more weeks and then I relocate far away.

I won't be here when Seattle discovers Amazon is just a bloated, empty shell losing money on many of its more ill-considered Bezos vanity enterprises.

Amazon likely will be Seattle's next SeaFirst or WaMu, but Bezos and his personal billions will be long gone by then.

I'll watch Amazon and Seattle implode on the national news and just shake my head.
Posted by Purrl on June 4, 2014 at 12:54 AM · Report this
2
Goodbye and good riddance Seattle. Three more weeks in this techie hell and then I'll relocate far, far away.

I won't be here when Seattle discovers Amazon is just a bloated, empty shell losing money on many of its more ill-considered Bezos vanity enterprises.

Amazon likely will be Seattle's next SeaFirst or WaMu, but Bezos and his personal billions will be long gone by then.

I'll watch unfold on the national news and just shake my head.
Posted by Purrl on June 4, 2014 at 12:51 AM · Report this
1
$15/hr will also raise rents.
Not saying $15 is bad.
But that's just one of the impacts -- more buying power.
In fact that's the whole purpose.
Posted by unregistered 9182 on June 3, 2014 at 10:50 PM · Report this

Add a comment