How FAANG stocks fuel real estate demand

Grete Suarez
·Producer

Markets are widely expecting the Federal Reserve to cut rates next month, and that’s a positive sign for the housing market. But the Fed is not the only factor impacting real estate demand.

FAANG stocks — Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Google (GOOGL) owner Alphabet — are making a direct impact on real estate demand, says Hessam Nadji, CEO of Marcus & Millichap (MMI).

“The five companies have absorbed something like over 14 million square feet of office space in the last 12 months alone and have become major tenants in a number of markets around the country,”Nadij told Yahoo Finance on The Ticker.

While e-commerce is killing brick-and-mortar stores, Nadji says the other side of the story is how the growth of these companies is changing retail and creating jobs to support it.

“If you look back at the last 12 months, almost half a million jobs were created in professional business services and technology jobs,” said Nadji. “On top of that, it became a very big factor in office space demand, and in warehousing demand as related to e-commerce.”

NEW YORK, NY - JUNE 3: The Google logo adorns the outside of their NYC office Google Building 8510 at 85 10th Ave on June 3, 2019 in New York City. (Photo by Drew Angerer/Getty Images)
NEW YORK, NY - JUNE 3: The Google logo adorns the outside of their NYC office Google Building 8510 at 85 10th Ave on June 3, 2019 in New York City. (Photo by Drew Angerer/Getty Images)

FAANGs move beyond the Bay area

Nadji said the impact of technology companies is not only limited to typical locations such as San Francisco Bay area, Austin, or Seattle where tech firms are known for having headquarters.

“It’s everywhere,” Nadji said. “Atlanta, Dallas are great example of job leaders, New York, where over 100 thousand jobs are being created last month, are seeing influence of technology jobs coming into the economy more and more.”

But real estate demand isn’t just fueled by any one particular FAANG company. The growth of all of these giants are dispersing its reach to other markets.

“If you look across the spectrum of technology firms, you see the demand basically show up in markets even like Chicago or Detroit, where you’re seeing a little rebirth of different industries coming in,” said Nadji. “Technology is a big part of that.”

Grete Suarez is producer at Yahoo Finance for YFi PM and The Ticker. Follow her on Twitter: @GreteSuarez

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