How Tech Companies Relocating is Impacting the Real Estate Market in the United States
Earlier this year, Amazon called for various cities to offer proposals on its second corporate headquarters. The tech giant plans to invest $5 billion in a new facility, as well as generate 50,000 high-paying jobs in the span of 10 to 15 years after it becomes operational. Around 238 cities have submitted their proposals, including New York, Chicago, Los Angeles, and Miami, and smaller cities such as Pittsburgh, Cincinnati, Orlando, and Denver.Depending on the area, the presence of tech giants or startups may pose either positive or negative effects on the real estate market. A CNN report points out that cities with limited housing may experience an unprecedented spike in prices, while major cities like New York are less likely to undergo any major economic transformations. Take a look at Seattle, which is the location of Amazon’s current headquarters. Real estate experts have expressed that Seattle once had one of the most affordable housing markets in the United States. But with its 13.5% increase in home prices last July, this is not the case anymore. Additionally, Amazon reportedly takes up 19% of prime office space in the city, a number twice as large as any other company’s footprint in Seattle.A similar situation is occurring in Silicon Valley. With many tech behemoths and hundreds of startups occupying commercial space, and housing in the area has reached a historical low. And due to the fact that some of the firms have already made expansion plans, the situation is now more complicated. According to CNBC, Google has purchased 52 properties in Sunnyvale for $820 million. The company, which already has more than 72,000 employees, requires more space to generate more jobs.Because of low inventory, house prices have soared. Data relayed by Mercury News specified that in Los Altos, a square foot of residential property was worth $1,291 in August (up 4%); in Palo Alto, $1,499 (up 4%); in Sunnyvale, $994 (up 7%); and in Los Altos Hills, $1,412 (up 7%). What’s notable is that even though sales across the Bay Area have dropped, they have increased by 13% in Santa Clara County – the heart of Silicon Valley. It is a unique situation, especially since the County’s housing inventory is so low. Analysts speculate it is because there is no shortage of buyers, and since the area is populated with tech companies, people tend to go with whatever viable option they can find.Housing situations in other tech-driven cities fare a little better. In general, a thriving tech industry in the city is often a sign of a healthy economy. Huntsville, Alabama for instance, has been a tech center since the 1950s, largely due to NASA’s presence. The workforce consists mainly of jobs in science, technology, engineering or math. Its edge over Silicon Valley lies in its cost of living, meaning people here can live comfortably on an average salary. The median rent in Huntsville is only $950 a month, which is a good balance for the city’s median early career salary of $59,000. Since Silicon Valley has become overpopulated, other tech companies are fleeing to different cities. The Miami Herald wrote that Miami has recently been eyed as a home base for international tech startups, especially because the eMerge Americas technology conference was held there last June. While the city is popularly known for its beaches, its prospects for the tech industry are often overlooked. Discover Homes Miami indicated that the city has a fresh tech ecosystem because of the potential of rich investors. Furthermore, Florida does not implement income tax, which means a startup company could operate from an apartment, a rented shared space, or a single-bedroom house.Whatever impact tech companies may have on certain areas, there’s always a set of advantages and disadvantages. At any rate, real estate businesses should be prepared. For more real estate news, you can read through Real Estate Tech News’ archive.