The Wethman Group’s Real Estate News – November 2018

November 2018


We’re taking a break from our usual newsletter format to provide an analysis of the Amazon HQ2 announcement. The Washington area and more specifically the newly christened “National Landing” area of Crystal City (comprised of parts of Pentagon City, Potomac Yards, and parts of Alexandria) will be the home of 25,000 new jobs, providing a boost to the local economy and tech ecosystem.
What We Know
  • Amazon has committed to 25,000 jobs over a 10 year period. They chose this area in part because of the extensive talent pool already here (emphasis added). Jobs are expected to be mostly in accounting and tech with incomes of about $150k. Of course, a ‘new’ business with such a significant presence is also expected to create jobs in supporting industries like retail, construction, and service businesses nearby (with lower incomes.)
  • Amazon has made a commitment to STEM education investments, including a new Virginia Tech campus focused on Computer Science as part of National Landing, and investments at George Mason. The idea here is that Amazon is hoping to hire some homegrown (and local) talent years down the road.
  • Incentive payments to Amazon are dependent on the actual number of jobs created.
  • Arlington and Alexandria have committed to investing $570 million in transportation improvements, and Virginia has committed to an additional $195 million. Planned investments are additional entrance(s) to the upcoming Potomac Yard metro station, improvements to Rt 1, pedestrian bridges. Additional funding is available if Amazon creates more than 25,000 jobs.
Much has been said about this number of employees creating havoc in our already strained real estate market. We’re advising our clients to take a wait-and-see approach on the real estate market impacts. Our area is more than capable of absorbing these jobs, but market impacts will be uneven both economically and geographically.

Job Absorption

This area is well positioned to absorb the expected 25,000 jobs to come over the next 10+ years. The region already annually adds 34,000 jobs on average; in 7 of the last 17 years we absorbed one FULL (50,000) Amazon’s worth of jobs! (See graph at left.) This could end up being a ‘blip’ in the greater regional area.


Companies whose talent is being poached may or may not backfill hiring, and those companies are scattered throughout the region. Many employees hired locally will not relocate because it just won’t make financial sense and/or the situation will be complicated by a spouse’s commute or kids in school. Consider a hypothetical tech worker making $150k and living in the Reston area. If hired by Amazon (and remember, they’re coming here for the existing talent pool), is this person likely to sell their current home and relocate to Arlington? It’s possible, but it’s more likely this person will just factor in their new commute as an opportunity cost in taking the job. That employee’s current employer will then need to hire someone, who may or may not live in Arlington. See graphic at right for expected distribution of housing for HQ2 employees.

Rising commercial rents in the area may push some existing companies out and/or discourage others from locating there; in fact, other companies that had been considering relocating to Northern Virginia may now choose not to come at all because of the upcoming fight for talent. Similarly, some companies located in the greater metro region may choose to leave because of the expected increase in competition for employees or may choose to locate further out so that their employees will be able to afford more (potentially giving them a recruiting advantage.) Bottom line: the net job increase for the area may not be 25,000, and the jobs-to-household ratio is far from a 1:1 correlation.


It’s no surprise that traffic is expected to be worse as workers move to Crystal City and nearby businesses grow. It remains to be seen how much the transportation investments from the County, City, and State will help. Work from home trends may also spread out the hiring and ease commutes–Amazon is one of the top ‘work from home’ companies. Additionally, the high speed (15-minute commute) trains being developed between DC and Baltimore over the next 10 years–the time frame of Amazon’s growth here–could significantly alter the housing landscape of the region.
Housing Inventory – Sales and Rentals
We can certainly expect an inventory shortage for buying, but also a more significant rental shortage in the short term (first few years) of the deal. Speculators will swoop in hoping for to find a cash flow positive deal—they’re unlikely to find one currently. As always, buy and hold is a much safer strategy, and especially now.
Longer term, builders can build condos and/or convert existing apartments and office buildings to condos for quicker delivery. There isn’t much (any??) land left to build developments, so expect prices on townhouses and single-family detached homes to rise disproportionately vs, condos in the immediate vicinity. There is a strong pipeline of multi-family development already planned for the DC area (see graph). Tear-downs will swooped up by builders at breakneck speed.
Once the employees arrive, the segment most likely to see increased competition is the $400-600k range, which is the likely purchasing power of someone in the salary bracket Amazon is hiring.
Certainly, this will speed ongoing gentrification of South Arlington and affect nearby pockets of relative affordability that currently exist. With our current affordability crises, even a small increase in prices may have a disproportionate ‘push out’ effect for lower-income workers and renters, and any increase in property taxes resulting from higher valuations will also hurt longtime homeowners on fixed incomes.
  • These jobs are coming over time, and our area is easily capable of absorbing them.
  • Expect a short-term psychological bubble – sellers should take advantage of this, buyers need to not panic, and investors should proceed cautiously. Think rationally and don’t get caught up in the hype.
  • Expect dramatic rent increases as a result of the trifecta of this area being the ‘next big thing’, eventual students at the new VT campus, and new hires relocating (who will rent for a least a while before buying, if they buy at all.)
  • Housing impacts will be dispersed throughout the area and gradual. Inventory shortages will be most severe in the segments and locations we already have them: entry level townhouses and detached homes in close-in Arlington and Alexandria.
  • Appreciation in property can only be realized if you’re selling, and is a double-edged sword—expect higher property tax assessments (and remember that deductions for state and local taxes like property taxes are now capped in the new tax law.)
There ARE opportunities here, if we don’t lose sight of the fundamentals.
We’re trying to give you a realistic view of market conditions, and not just trumpet the hype. We’ve seen some excellent opportunities in parts of South Arlington and the northern end of Alexandria. Contact us to discuss your buying or selling strategy.

New York Style – Micro Condos Hit DC!

Do you love the idea of DC metro living, but your wallet disagrees? Or want to live in some of the top areas in DC, but don’t want to rent anymore?

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The brand new Manhattan inspired “Micro Condos”, Adam’s Morgan might be your answer. This new development: Moda 17 is fresh change to the condo market, for younger buyers who want the city life style, and convenience, without the heft price tag! These units range from 350-680 square feet, but offer streamline construction and design to help maximize the space. These units are also more affordable than other units in the area, ranging from $249K for studios, up to $549K for two bedroom units.

The units are designed with space saving features like pocket doors, built in storage and shelving, frost glass and even build in beds to help maximize every foot. The builder also designed many units without hallways to create a more open and efficient layout.

Other highlights of Moda 17 include:

-Roof top Terrace with City Views
-Low condo fees ($191-383/mo)
-Bike Storage
-Private Storage Space

These units are in an unbeatable location, across the street from Harris Teeter and just steps to a number of restaurants, retail and night life in Adams Morgan, Logan Circle, Dupont Circle And U St/14th St corridor. The areas also has a 93 walk score!

For renters in the area, this more affordable option versus paying higher rent prices!

Moda 17 is located at 2424 17th St. NW, Washington.

Contact us today, if you are interested in learning more about these micro units, and buying in DC! Most of our team is licensed in DC, VA and MD!


Herndon Metro Stations – Planning Workshops Begin

According to the Washington Post, a public planning workshop is scheduled for today at 6:00 pm at the Herndon Senior Center.  The workshop is part of a year-long study to update Herndon’s land-use plan, including the plans for Metro’s new Silver Line rail extension station scheduled to open in 2016.

The station, though planned for the median of the Dulles Toll Road, will have a pedestrian bridge which town officials hope will connect to a public plaza, mixed-use offices and residential buildings, and other development.  Attendees of the workshop will review plans and photos of Metro stations in Hyattsville, Silver Spring, Wheaton, and Clarendon to discuss which types of development appeal to them.  Another workshop is scheduled for the fall and the Herndon Town Council is expected to adopt a plan in the spring.

Significant redevelopment in an area, including the addition of a popular transit choice like Metro, will undoubtedly affect property values in the area.

Herndon isn’t the only jurisdiction making big plans along the Silver Line–Arlington County recently adopted it’s redevelopment plan for the other end of the planned Silver Line at East Falls Church Metro station.


Lyon Village Playground & Sprayground – A Summer Treat for Kids!

Arlington residents know that one of the ‘coolest’ places to be on a hot summer day is the Lyon Village Spayground, located at 1800 N Highland St in Lyon Village, just off of Lee Highway.  According to Arlington County’s website, “the 1.5 acre park was completely redesigned with the help from Lyon Village Civic Association. A new water play area at the Lyon Village Park playground offers kids a fun way to beat the heat this summer. Five in-ground sprays gushing water into the air take running through the sprinkler to a new level. The free, public “sprayground” also features a 13-foot-high water wheel and dumping bucket that splashes kids with water.”  It also features a sandbox, new paths, an ADA accessible water fountain, play areas, and swings.

New hours start July 17:

Mon & Tues: 10-3

Wed: 2-8

Thurs: Closed

Fri: 2-8

Sat & Sun: Noon – 8

Yelpers give positive reviews, noting its “friendly neighborhood vibe” and calling it “masterpiece of summertime playground fun.”

Now, if only there were an equivalent park for adults in Arlington…

If you’re looking to buy a home in Lyon Village, you can search here.  If you would like an automated monthly report of home sales in Lyon Village, you can sign up here.