Building Boom: The Top 10 Construction-Friendly Amazon HQ2 Finalists

Amazon promises to build a $5B second headquarters to host 50,000 high-paying tech employees with a median income of $100K in the city that offers the most alluring incentives — but once you take in a tech powerhouse like Amazon, the construction boom won’t stop with HQ2. 

A flood of residential and commercial development is expected to hit the winning city in a building boom that will likely cause housing costs to spike and a rash of new businesses to sprout up in hopes of capitalizing on the densely populated market and ballooned demand.

A finalist city without stable infrastructure, business-friendly policies or a strong enough construction workforce to handle the flurry of development that will flood the winning city could lead to great pains for residents in the long term. 

“[Amazon] will bring in not just the employees themselves, but all of the businesses that will support them — the schools needed, the restaurants needed, all of the things that are needed to support that many people,” said David Cain, chief marketing officer at mobile construction software company PlanGrid. 

In a report analyzing the 20 HQ2 finalists to determine which is the most construction-friendly, PlanGrid found the 10 U.S. metro areas that are the most equipped to handle the inevitable construction boom that will come with HQ2, ranking them in the following order:

• Austin, Texas
• Northern Virginia
• Denver
• Raleigh, North Carolina
• Dallas
• Atlanta
• Boston
• Nashville, Tennessee
• Montgomery County, Maryland
• Columbus, Ohio

PlanGrid evaluated three key factors in determining finalists’ construction friendliness: the city’s business environment, its access to infrastructure and its ability to produce skilled construction talent.

Austin was determined the winner in the ranking thanks to high markings in both state and city business-friendliness and its strong construction market. Northern Virginia, a presumed front-runner in the HQ2 race, came in second largely due to its strong real estate and infrastructure rankings. Cain said he was not surprised that larger metros like Chicago, Miami, Los Angeles and New York City did not make the cut. 

Assessing whether a city’s infrastructure could support both the construction and influx in residents that would come with HQ2 played a huge part in the study — from the roads, bridges, tunnels and utility systems needed to support 50,000 new residents, to the access to shipping ports and airports needed to bring in construction materials. Access to construction labor was also key.

“It’s not just [access to] the pool of skilled labor. You also want to make sure they’re the type of folks that lean toward leveraging technology,” Cain said.  “[They can build] at a much faster pace and stay on schedule if they’re leveraging the latest mobile and collaboration tech.”

PlanGrid specializes in construction tech that provides access to blueprints, punch lists and daily reports for builders in real time.

Amazon’s new headquarters could resemble the tech giant’s Seattle campus, which consists of 33 buildings spanning 8M SF, 24 restaurants/cafés and eight other retail options — but the similarities may not stop there.

As a result of the “Amazon boom,” Seattle now has some of the fastest-growing home prices in the country, and a similar fate awaits the HQ2 winner. While median home prices in the U.S. as of Q2 were $255K, the median home price in Seattle — which has experienced a huge leap in real estate costs due to the influx of Amazon's high-paid workers — was $480K in Q2, up 14.3% year over year, according to Attom Data.

A recent study conducted by Zillow analyzing the potential effects Amazon’s second headquarters could have on rent appreciation in the 20 finalist cities, revealed that cities like Nashville, Denver and Los Angeles could experience nearly double the rent appreciation should Amazon set up shop in their markets. Cities like Atlanta and Northern Virginia were expected to experience a modest bump in rent appreciation as well. 

“Economic growth is a wonderful thing,” Seattle retiree Maryelyn Scholz told Bisnow in October. “But if it comes with traffic congestion, rising real estate prices, huge commute times and less family time, it’s time to be looking elsewhere.” 

Smaller companies are planning to open additional offices wherever Amazon selects to make its second home. PropTech company CityBldr, which uses machine learning algorithms to locate groups of residential projects zoned for multifamily use to sell to investors for a profit, announced last month it plans to open a third office wherever HQ2 will be built. The company aims to capitalize on the 50,000 employees planned to move into the area.

Though Amazon’s public bid war pit 238 states, provinces and districts across North America against one another in a race to see which will offer the best incentive package to the industry disrupter, companies of similar stature are not expected to follow suit. 

Consumer electronics giant Apple Inc. is reportedly seeking a 4M SF office to house 20,000 high-paying employees in Northern Virginia. While in the early stages of its site selection, CEO Tim Cook said the company is taking a much quieter approach in its pursuit of a new corporate campus, and the search would not include an auction-style process like that of Amazon.

Reports suggest Amazon could release a condensed shortlist of HQ2 finalists by month’s end.