Some think it’ll be the best thing to happen to Toronto since winning back-to-back World Series Championships (never forget) if we’re chosen as the location of Amazon’s second North American headquarters – ‘HQ2’.
It would bring an influx of new, coveted jobs to the city; it would put Toronto in the international spotlight (if Drake hasn’t already done so enough); and it’s a pretty amazing bragging right. It could even add more solid options to the dating game (just sayin’).
But it would also make the ridiculous cost of living in Toronto even higher, putting pressure on an already fragile rental market and causing your spending money to dwindle in the process. If your rent is currently making a major dent in your pay cheque, you better hope for a raise, as Toronto residents might have to pay at least another $137 a year in rent should the Amazon bigwigs decide to call Toronto home.
Back in September, of course, Amazon announced its plan to build a sister campus to its flagship headquarters in Seattle somewhere in North America. Out of more than 230 cities that submitted, Toronto made the shortlist of 20 recently announced finalists.
Should Toronto be selected, over a 10-year period, Amazon HQ2 would attract as many as 50,000 highly paid Amazon workers and an estimated 66,250 supplementary workers. Torontorentals.com had analyst Cebele Wong conduct a study on How Much Amazon’s HQ2 May Drive Up Rents in Toronto. They looked at historical building rates and StatsCan data, including average wages, to determine what impact the retail giant could have on rent prices.
In 2017, the average rent in Toronto was $1,308 – a figure most who live alone in the core probably pay more than. This average includes everything from studio apartments to three-bedroom rental units. As Torontorentals.com highlights, the city has experienced an average yearly rental growth of 2.2 per cent since 2006. And let’s not forget that the rental market is more competitive than ever (something anyone who has tried to rent a place lately definitely knows), thanks to a record low vacancy rate.
Torontorentals.com predicts that the arrival of Amazon would result in rents potentially increasing by another 0.5 per cent to 0.9 per cent, resulting in annual rent increases of 2.8 per cent to 3.1 per cent. This, they state, could amount up to a $137 hike in rent per year. Of course, the changes won’t be uniform across the city; certain neighbourhoods will experience more significant hikes depending on the location of the shiny new Amazon HQ2. It should be noted, however, that properties that fall under rental control regulation would experience no immediate impact.
The changes, according to Torontorentals.com, will come thanks to the influx of workers with wages higher than the metro median and who can afford higher rents. The good news is that, in terms of the total housing supply, Toronto has a healthy ratio of new jobs (and subsequently, population growth) to housing stats (which is no surprise given Toronto’s increase in density, one sky-high, glassy new condo building at a time).
But the potential rent increase is pretty much inevitable. Since the first Amazon headquarters was established in Seattle, the city has experienced a rent increase of around 3 per cent, although this dropped slightly in the last month of 2017. Similarly, the cost of home ownership also increased in Seattle. As a result, Torontorentals.com believes that the cost of renting or owning a home in Toronto is likely to jump an additional 1 to 2 per cent should Amazon open up shop in Toronto. While Toronto home sales are expected to drop in 2018 (they have dropped 22 per cent in January), they are predicted to pick up throughout the year, and prices are expected to climb. I don’t have to remind you that home ownership already remains a pipe dream for many millennials.
The addition of Amazon would make Toronto one of the world’s biggest tech and retail centres, attracting more sought-after, higher paying jobs as other global tech and retail companies follow suit. This, naturally, would increase Toronto rents and real estate even higher (though, admittedly, many will experience pay increases as well).
How likely is it that Amazon will invade Toronto? Well, Amazon’s standard list of criteria for cities includes a major metropolitan area with strong job growth, an educated workforce, a good pubic transportation system, affordable housing, and proximity to universities. So, it’s safe to say we’re not exactly thriving in each category (ahem, TTC…but seriously, can you imagine adding thousands of more people to a rush hour public transit commute?).
The effects of Amazon’s arrival on the housing market will probably have the greatest impact on the entry-level set (it’s already damn expensive to be a millennial living their best life in Toronto) and those looking to purchase single-family homes in the downtown core. But, with byproducts that include increased congestion and gridlock, all will feel its wrath. Let’s not forget that it could also hurt smaller Canadian startups when it comes to talent acquisition.
So, don’t be too disappointed if Toronto doesn’t make the cut.