Crystal City will be one of the homes of Amazon’s new headquarters, and the some 25,000 high-paying jobs that will follow. Hiring is likely to start this year, and then be spread out over the coming years, but the region as a whole is likely to prosper because of it. The city checked off almost every box: public transportation, airport proximity, abundant office space, an educated work force, and a transforming landscape. Attracted to the city because of access to local and regional talent, Amazon workers are expected to be high-paying technology workers that could help absorb much of the supply in and around the submarket.
The inventory expanded by more than 10% from 2015- 18. These properties leased quickly, causing only brief periods of vacancy expansions. Developers look to positive demographic trends to justify another 3% inventory expansion.
The population has grown more than 20% since 2010, one of the strongest rates in the metro. The live/work/play environment draws wealthy, educated renters to the submarket. Government jobs dominate the area, but there is an emerging technology scene, something that the Washington, D.C. metro as a whole is lacking. High living costs are likely to become even more exacerbated with Amazon’s announcement.
The submarket is one of the most expensive in the metro. Properties compete with Rosslyn and Ballston, as well as closer-in submarkets like Southwest/Navy Yard and H Street/NoMa. And even if renters want to live in an older unit, rents are still high. The spread between 3 Star and 4 & 5 Star rents is 13%.
Rent growth underperformed this cycle, likely because of the rise in vacancies. Most supply-heavy submarkets throughout D.C. suffered similarly. Still, rents grew more than 20% from 2010-18, or about 2.3% annually. There was very little difference between growth in a 3 Star property or a 4 & 5 Star property.
All these factors contributed to what might be most impressive: more than $1.7 billion in sales volume from 2010-18. Nothing traded last year, primarily because a handful of companies own the majority of the assets. This makes buying difficult and costly. But a few notable properties are fielding bids, especially those positioned near the future Amazon campus.