While it's been rumored for a while, Amazon finally announced their choices for their 2nd and 3rd base of operations (can you really call it a headquarters at this point?) and neither is in Chicago. Although many of us, including me, thought Chicago had a lot going for it, speculation is that Chicago's and Illinois' budgetary and government problems were too big to overcome.
That may be true but the fact remains that all those employees will need to find housing and that's where I think Amazon may have missed the boat - at least as far as Long Island City is concerned. The big thing that Chicago had going for it, despite all the moaning and groaning about the lack of "affordable housing" here, is that for an urban area we actually have pretty darn affordable housing.
Let's set the Chicago baseline by looking at a recent example of a single family detached home that sold at 2130 W Huron in Ukrainian Village in July for $1,015,000. Basically $1 MM got you a 4000 sq ft home built in 2004 with 5 bedrooms, 3 full baths, and 1 half bath on a 24 x 121 lot and the property taxes are going to be around $20,000/ year. And this is in a fairly urban setting where you can easily walk to stores and restaurants and are only 15 - 20 minutes away from the central business district by car. The Walk Score is 97.
Now the Crystal City location is not too bad with respect to housing costs. I found this 4 bedroom, 4 1/2 bath, 3210 sq ft home that sold at 5802 Falls Gate Ct in Falls Church, VA (slightly west of Crystal City) back in June 2016 for $740,000. Property taxes are a lot lower than Chicago at about 1.2% of assessed market value vs. Chicago's 2%. The only problem is that the area is more like a suburb than an urban environment. The Walk Score is only 50 and the nearest stores and restaurants are a part of a giant mall at Bailey's Crossroads.
The real problem is going to be Long Island City. It's Crazy Town. $1 MM doesn't go very far there. For example, this 4 bed, 2 bath, 3400 sq ft house at 4832 38th St just a bit east of the central business district in a very middle class neighborhood is a total dump (check out the photos) and went for $940,000 back in September 2017. It appears to be chopped up into two apartments. However, property taxes appear to be really low at around 0.6% but that might just be because the assessor doesn't really understand it's value. And it's hard to get an exact Walk Score for this address but it appears to be in the 90s.
And rents appear to be in line with the price of this home. Supposedly the average rent in Long Island City is $3458/ month but I don't know what size apartment that is. However, knowing the New York market it's probably pretty small.
So you would think that housing costs would matter to prospective employees, right? Chicago could have offered them a much better standard of living at a much more affordable price.
#RealEstate #ChicagoRealEstate #AmazonHQ2
Gary Lucido is the President of Lucid Realty, the Chicago area's full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.