Amazon's HQ2s Could Pressure Seattle's Office Market

By Laura Kusisto

Amazon.com Inc.'s decision to open two new headquarters "full equal" to its Seattle location could diminish demand for office space in the company's hometown.

Amazon creates as many as one in three jobs in Seattle between direct jobs and spinoff jobs such as lawyers, accountants, and retail and food workers, according to a report by Green Street Advisors, a commercial real-estate research firm. Median household incomes have grown 32% in Seattle since 2010, compared with 21% nationally, according to Green Street.

Seattle remains a relatively difficult market in which to build new office buildings and apartments. That has led to outsize profits for owners of apartments, office buildings, industrial space and strip malls. Prices for those assets in Seattle have risen more than 100% since 2010, compared with about 66% in the top 50 largest cities.

Green Street analysts predict the online shopping giant will inevitably slow hiring in the northwestern city. "For HQ2 to achieve Amazon's stated goal as a 'full equal' to the Seattle headquarters in 15 years, most of Amazon's increase in corporate headcount over that time frame will probably occur outside of Seattle," the report says.

Demand for office space will remain but commercial landlords shouldn't expect to outshine other cities the way they have for the last eight years.

Write to Laura Kusisto at laura.kusisto@wsj.com

(END) Dow Jones Newswires

November 20, 2018 15:26 ET (20:26 GMT)

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