Amazon in Alberta? How a Second Headquarters Will Affect Real Estate


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Amazon in Alberta? How a Second Headquarters Will Affect Real Estate

Amazon is a household name. Who hasn't heard of this e-commerce giant? Did you hear the enterprise is opening a second North American office? Earlier this month, the company made the announcement, saying they will be spending $5 billion and hiring as many as 50,000 employees in the new Amazon Alberta location.

Amazon has humble beginnings as a company that only dealt with books. Now, it's a titan of e-commerce, payments, hardware, data storage, media, logistics, and a goal for other companies. It dabbles in several different industries and is the go-to site for both online shoppers and merchants. Amazon Prime, its signature membership program, has an estimated 85 million subscribers in the United States, roughly equivalent to two-thirds of American households. Last year alone, the company did $136 billion in sales.

And it could find its next home in Alberta.

Efforts to Build Amazon in Alberta

Since the company announced its intentions, the Alberta government has stated it will help the province's two major cities bid for the retail giant's second headquarters. Premier Rachel Notley recently informed the public that a consultation team of academic and business leaders will assist both Edmonton and Calgary to make the best possible bids. According to her, Alberta's low tax regime, network of post-secondary institutions, and young workforce should put the province among the top 10 percent of bidders.

However, Amazon isn't accepting bids from just any city. With the announcement came strict criteria that potential locations must meet. The company wants to be near a metropolitan area with over a million people and have access to a skilled workforce filled with top technical talent. They also want the new headquarters to be near an international airport, and they need direct access to mass transit and space to expand.

Calgary and Edmonton aren't the only Canadian cities rushing to put in their bids. Cities from across North America are scrambling to bid, including ones in Manitoba, Ontario, and Vancouver.

Read More: Plan Your Future Investment: City of Edmonton Growth Projections

What can be Expected from the Presence of Amazon?

Well, in short, big things. One only has to look at how the introduction of other giant companies has affected cities such as the new Google location in California. Google proposes to remake downtown San Jose into one massive, transit-centered Google village, creating up to 20,000 new jobs. In downtown San Jose, the existing office stock is roughly five million square feet, and Google wants to build an additional seven to eight million.

When you look at it, the benefits are endless. Large employers like Google and Amazon create market opportunity because as soon as they arrive, set up shop, and hire, that creates demand. All of a sudden you need to have the real estate to live, work, and play in. Jobs and wage growth are the strongest drivers of real estate, and with the amount both companies will be bringing in, real estate will jump. In San Jose, groups are already benefiting. From high-rise condos to little sandwich shops, businesses are seeing a positive change.

If Amazon accepts the bid from either Edmonton or Calgary, real estate investors will be happy as a clam. Since a lot of space will be required for the new building, developers will be working hard to meet a new housing demand. For condos and apartments nearby, the headquarters will drive up rents and prices around the area. Although some of the 50,000 employees will be Edmontonians or Calgarians, the company will draw many to its location of choice. With that, we'll see a quick rise in rent prices for existing units until supply catches up with the demand.

There is the possibility that Amazon may choose to call Alberta its new home, and if that happens, real estate investors will be among the group that benefits. The employees it will require will need housing, and real estate investors will be happy to oblige.

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