When a large company relocates or opens an additional headquarters in a city with room to grow, the impact reaches every aspect of the local economy. New jobs and higher average wages lead to population growth, a lower unemployment rate, increased tax revenues, and greater investment. New suppliers may follow, bringing new resources, and local businesses may expand to meet the needs of new residents.
All of these effects improve the quality of life in the city, which in turn draws even more residents, further increasing the demand for housing. It’s the process that made San Francisco, which looked like an entirely different place before the tech boom, the city it is today.
Because investors are aware of the economic benefits of corporate relocation, the impact on the housing market can be immediate, with prices rising before the move even takes place. For example, after Amazon built its corporate headquarters in Seattle in 2010, rents increased by more than twice the national average over the next seven years. It’s no surprise that when Amazon announced in 2018 that its HQ2 would be located in Arlington County, Virginia, real estate agents were inundated with calls from prospective clients and home prices began to rapidly rise before Amazon finished moving in.
For real estate investors, profiting from the impact of a corporate HQ on a city is, as with most investment decisions, about getting ahead of the change. Without insider knowledge of corporate plans or a crystal ball, the best real estate investors can do is analyze relocation trends, identify what drives companies to relocate, and focus on cities with the most business opportunities. In other words, think like a Fortune 500 CEO.
Through increased relocation activity over the last five years, several trends have become apparent.
Why Corporations Are Moving
Corporations relocate their headquarters for a number of reasons, and the primary drive varies by industry. Of the…