Updated: Oct 17, 2019
By now, everyone is aware that Amazon is coming to Arlington. It's already here. We were poked and prodded. Up against numerous other major-market cities, we stood on our toes to get that extra inch or two and look our best. Somewhat surprisingly, Arlington won. Well, New York City won too...until they somehow screwed it up for themselves -- another story in itself.
Initial effects on Arlington real estate
News broke and the year-long rumors were confirmed. It was a global story and so other powers all of the sudden seemed interested. Local businesses began looking to expand their footprints. There was a serious buzz to close 2018. Residential real estate sub-markets in Crystal City, Pentagon City, and Pentagon Row reacted as well.
The official announcement in November 2018 spurred the local housing market to go into overdrive...for about a month or two.
Townhomes and condos, in particular, showed a 300% increase in closed sales compared to the year before. The number of homes that entered the market as "for sale", regardless of whether they sold or not, increased by an even greater percentage.
Here's the other side of the coin. Not all of these homes sold. Many homeowners were simply probing the market to see if they could make a quick profit and/or determine the new value of their homes.
Buyers were speculative as well. Many sought to buy immediately and scoop up a "deal" before home prices sky-rocketed, effectively pricing them out of the market. Others looked to nab an investment property, either for rental purposes or for future resale.
Then the calendar turned to 2019. Soap opera over. You will likely hear or read about the incredible overnight transformation of the old and tired Crystal City into a gleaming new metropolis. Yea, there is a buzz.
But the devil is in the details.
Data can be sliced and diced to tell many different stories. So let me try to do this as objectively as possible. Let's look at July, some 8 months after the announcement.
In July 2019, the median sale price for homes was up by 40% over the "normal" July for the zip code of 22202 -- an undeniable fact. What you may not hear is that the number of new and active listings in the area was down by 100% compared to the average July.
I don't think people are quite sure what to make of the market right now. We are still in a feeling out period. A drastic cut in homes on the market has created bidding wars for the few homes that are available.
Is the area effected by the Amazon news? Yes. Is it time to liquidate all your assets to suck up as many sure-thing properties you can in Crystal City? You've got to answer that one for yourself.
What is this "National Landing" they speak of?
Does anyone really know?
Here's what we do know. It's part of Crystal City, Pentagon City, and Potomac Yard. But it's not all of them. Just parts of each one. It's part of Arlington but also part of Alexandria. And it's not yet the National Landing. But it will be?
Unless I'm missing something, there is no actual "landing area". Planes land at the nearby airport, but the airport itself is not part of the National Landing. Or is it? Does the "landing" refer to a yet to be constructed platform on the Potomac River?
We know money is going to Amazon. Arlington is paying. We promised to pay them. So we will. We have to.
$23M was offered and accepted as part of an incentive package for Arlington to pay Amazon directly. Then another $200M to sweeten the deal. CNN reports this figure could reach more than $550M if certain incentives are reached. Who really knows. No matter the figure, Arlington made itself look really good in a wet t-shirt. Residents have predictably been split on the notion of paying a business to come to the area. Paying them with tax dollars.
But hey, it's Amazon. When an Amazon says jump.....
Look, Amazon is undoubtedly contributing, albeit more indirectly, with jobs creation and commercial real estate investments, among other things. The difference is...they don't have to. It's based on good will. We are committed. They'll try really hard though, okay?
Plus, Amazon's commercial space is slated to be mixed use with retail on the bottom floors --good for the local economy and for small businesses. They've already posted hundreds of jobs for hire -- good for local employment. They've already contributed millions in real dollars to affordable housing in the area (good for gentrification).
However, word is many of these available jobs have gone unfilled and the first office building isn't planned for completion til 2022. Historically, comparing planned project timelines to actuals in Arlington paints a discouraging picture stats for construction projects.
Transportation is going to be an in issue. Private transportation. Public transportation. Pedestrian transportation. It is an anticipated challenge though so that is a good sign. And dollars have been dedicated towards alleviating the projected disturbances. Amazon has even pledged to contribute specifically to this. That's proactive and that is good.
Developers provided NBC Washington with a rendering of a proposed pedestrian bridge that would connect Crystal City to Washington - Reagan National Airport in an effort to mitigate anticipated traffic concerns, both auto and pedestrian.
Look. There's a good chance, maybe a probability, that the residual effects brought on by Amazon's entry to the area will invigorate the area and get certain projects done that would never have gotten the funding or political backing without it. That's the hope. And it's a calculated one, at that. BISNOW shared some current growth statistics.
$11.6B -- Total asset value (across Crystal City, Potomac Yard and Pentagon City)
18.5M -- SF of office space (including the Pentagon)
12M -- SF of office space (not including the Pentagon)
475 -- Retail storefronts
18.5% -- Overall vacancy
3,734 -- Residential units under construction.
The current median sale price in 22202 being around $707,000, we can conservatively (this figure should rise over time) project nearly $2.6B in residential real estate set to come on the market in the coming years. Yes...that "B" is for Billion. And yes...that opens some eyes.
What is the "Amazon Effect" really?
Around the Washington DC area and especially in the real estate industry, the "Amazon Effect" is a term dubbed to describe brick and mortar retail, residential, and commercial real estate growth. It encompasses an increase in traffic and the subsequent transportation reform planning. It describes the influx of jobs. It's effect is physical. You can see it.
Buuuuut that's not what this term really means nationally and even globally. Historically, it's been about the online marketplace. It's about how Amazon has changed retail. Changed the way we shop. Changed the way retailers compete.
It's about putting brick and mortar retailers out of business.
Whatever effect Amazon has on our physical area is yet to be seen. Let's hope this works out. And I think it will. Can we just come up with some more appropriate names?