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October 19, 2017

Here's what new Amazon HQ could do to Philly's rent prices

Mayor Jim Kenney's proposal to erect Amazon's second headquarters in Philadelphia could bring some 50,000 new jobs to the city over the next decade and a half.

But if Amazon were to choose Philly, how much of an impact could such a move have on the city's already rising rent prices?

Actually, renters here wouldn't feel the heat as much as they would in other prospective winners of the HQ2 sweepstakes, a recent report found.

Apartment List studied the potential impact on renters in 15 cities that are among a long list of those hoping to woo the retail giant.

Pittsburgh and Baltimore, for example, could see its rent prices increase by an additional 1 percent or more per year over the following 10 years if they land the new headquarters, the report states. In Raleigh, the new headquarters could drive annual increases of up to 2 percent.

But the site forecasts a more moderate average increase of 0.6 to 0.8 percent a year in Philly. The report points out that Philly's large size and an average vacancy rate in Center City near 9 percent in 2016.

"The difficulty of building in the metro will still put some upward pressure on rents with the additional workforce growth," the report states. "The metro approved less than 11,000 new permits a year from 2005 to 2015, a rate that would need to increase to accommodate both the existing job growth and the new Amazon workers."

In terms of potential rent increases from highest to lowest, the report ranked Philly somewhere in the middle of the pack.

Wherever it lands, Apartment List noted that "HQ2" will drive up rent prices to some degree. But the site estimated that metropolitan areas like Dallas, Los Angeles, Chicago and Washington, D.C. would see only marginal increases.

Kenney said Thursday that Philly is in a "Goldilocks zone" for the new headquarters after the city formally submitted its bid, which includes three potential sites. Cities had until Thursday to submit a final proposal.

The full Apartment List report can be found here.