Amazon.comÂ Inc.Â said it would commit more than $2 billion to create and preserve affordable housing in three of its employment hubs,Â the latest tech giant to make a large investmentÂ in easing the U.S. housing shortage.
Amazon said it intends to invest in affordable housing over the next five years in three regions where it is a major employer: Seattle, Arlington, Va., and Nashville, Tenn.
The online giant has more than 75,000 workers in the Seattle area, its main headquarters. Amazon has more than 1,000 employees each in Arlington, across the Potomac from Washington, D.C., where it is establishing a second headquarters, and in Nashville, where the company is building an operations center. It plans to have at least 5,000 employees in each region within five years.
The bulk of its investment will be through low-cost loans to preserve or build affordable housing, Amazon said. The company also will offer grants to public agencies and minority-led housing organizations.
âWe donât have control over how the [housing] markets respond to a large employer coming into the market or expanding in the market, but we can play a role in how Amazonâs growth is impacting our local communities,â said Catherine Buell, head of community development for one of Amazonâs philanthropic arms. âParticularly as weâre expanding our corporate presence, weâre working to get ahead of the issue as much as we can.â
A slew of large tech companies in 2019 committed to investing in affordable housing,Â particularly in the San Francisco Bay Area. Job growth has outpaced new housing supply in many large cities, especially on the West Coast.
AlphabetÂ Inc.âsÂ Google has committed $1 billion towardÂ Bay Area housing, andÂ AppleÂ Inc.Â pledged $2.5 billion for housing throughout California. Redmond, Wash.-basedÂ MicrosoftÂ Corp.Â has committed $750 million toward affordable housing in the Seattle area.
FacebookÂ Inc.Â also pledged $1 billion toward affordable housing in and around Silicon Valley, one of the most expensive areas in the country. The social media giant said last monthÂ it would spend $150 million on homesÂ for the lowest-income residents of five Bay Area counties. This funding would support the development of at least 2,000 units.
For some of the worldâs largest tech companies, which regularly generate tens of billions of dollars or more in revenue annually, these phased-in housing commitments arenât expected to have a big impact on their bottom lines. Amazon doesnât expect to make money from these housing investments and there is no special tax treatment for them, according to a person familiar with the program.
The housing efforts also come as Facebook, Alphabet and other big tech companies are facing scrutiny in Washington and from state attorneys general over their business practices.
Many housing advocates have welcomed these contributions, saying large employers like tech companies have played a role in driving up home prices by attracting well-paid workers who can pay more for housing than longtime residents.
But advocates also say these investments arenât expected to solve the housing shortages for lower and even middle-income earners in these expensive metro areas. Solving the countryâs affordable-housing crisis would require policy changes and government spending, not just private-sector investments, said Chris Herbert, managing director of the Harvard Joint Center for Housing Studies.
âItâs going to take a much larger investment of resources to address the problem at a scale thatâs needed,â he said.
The Covid-19 pandemic has disproportionately affected renters, and housing advocates have warned thatÂ millions of renters could face evictionÂ this year.
Amazon said it plans to create or preserve more than 20,000 units affordable to households making between 30% and 80% of each areaâs median income. It expects about half of those units to come from preservation or from converting market-rate rentals into affordable housing, Ms. Buell said.
The company has so far spent about $380 million in loans and grants to help the Washington Housing Conservancy acquire a multifamily property in Arlington near Amazonâs planned second corporate headquarters. Real-estate investment trust JBG Smith Properties also invested in the project.
âThis is the housing stock that is most at risk of being lost to private development,â said Kimberly Driggins, executive director of the Washington Housing Conservancy. âThis building would typically have gone to a private developer toâ¦continue to escalate rents.â
Amazon also committed about $185 million in loans and grants to help the King County Housing Authority preserve about 1,000 apartment units in the Seattle area.
Before the latest commitment, Amazonâs biggest housing-focused investment was $100 million to build and operate a homeless shelter on its Seattle campus for Maryâs Place, a local homeless-services organization. The shelter opened in March.
The post Amazon Pledging More Than $2 Billion for Affordable Housing in Three Hub Cities appeared first on Real Estate News & Insights | realtor.comÂ®.
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