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As Amazon’s gaze sweeps the country in search of a home for a second headquarters, Colorado governments and businesses are building a large “WELCOME” sign as detractors plead for the behemoth to look elsewhere.
Those opposed have named several concerns about the addition of 50,000 Amazon employees and 66,250 supplementary workers, including rising rents. And a recent Apartment List study shows those fears may not be off base.
Amazon alone could raise rents 8.8 percent over a decade, with an annual increase of 0.8 percent on the low end and 1.1 percent on the high end. That translates to renters paying $7,751 to $11,452 more in rent over that period, according to an Apartment List analysis.
The study used a variety of data to make its conclusions, including data from the U.S. Census and Bureau of Labor Statistics, historical building rates and an ease of building factor. It used Amazon’s request for proposal to estimate how much new employees would earn.
The problem is exaggerated by an existing low vacancy rate that sits around 5 percent and a historical average of 12,026 building permits a year, which would not give the metro area enough room to smoothly absorb Amazon employees, according to Apartment List.
The current median wages in Denver are around $41,250 but new housing for tech workers, who would make on average $100,000 per year, would likely skew toward expensive, luxury apartments, according to the study.
Although Denver would experience additional rent growth, it’s not as extreme as it would be in other of the 15 most like locations for the new Amazon HQ. Raleigh, N.C., Pittsburgh and San Jose, Calif., would face an extra potential annual increase of 1.0 percent or higher on the low end.
Colorado submitted its proposal to attract Amazon’s second headquarters Wednesday, a day before the deadline. Compared to other proposals, Colorado’s was more subdued, lacking an offer to name a city after the company (Georgia), not sending a 21-foot cactus (Arizona) and not offering $7 billion in public incentives (New Jersey).