(Bloomberg) -- Music City is set to continue its multiyear boom after landing a 5,000-person operations center from Amazon.com Inc (NASDAQ:AMZN).
The Internet giant will become one of Nashville, Tennessee’s biggest employers with news Tuesday that Amazon will open a $230 million facility in downtown, with average wages more than $150,000 -- or triple the city’s median household income. While its Amazon haul pales in comparison to the 25,000 jobs bound for each of New York and Arlington, Virginia, its presence could affect life in Nashville almost as much on a relative basis.
Only 8 percent of Nashvillian households earn $150,000 a year or more, compared with 14 percent in New York and a third of households in Arlington County, Virginia, according to the U.S. Census. On the downside, home buyers already stung by rising prices will see prices escalate even more.
Thanks in part to the city becoming a millennial magnet as well as its increasingly prominent role in the music industry, the average cost of a house in Nashville jumped 75 percent over the past five years. That marks the third biggest gain among large U.S. cities after Dallas and Atlanta, according to Zillow Group Inc. It ranks ninth in rent growth.
“There is a lot of redevelopment going on, a lot of new housing product coming on,” said Courtney Ross, chief economic development officer for the Nashville Area Chamber of Commerce. “And this will go on over the next seven years, so it doesn’t come all at once.”
Cash Incentives
Amazon is set to receive a total of more than $100 million in incentives, including a $65 million cash grant from the state along with a $22 million tax credit. Nashville is offering a $15 million cash incentive.
Nashville’s location in the center of the U.S. and at the intersection of three interstate highways makes it a natural for logistics firms. Amazon has been ramping up its own delivery operation to slash its dependence on FedEx Corp (NYSE:FDX). and United Parcel Service Inc (NYSE:UPS). It created a 40-jet fleet of planes called Prime Air and has added speedy home delivery services such as Amazon Flex. The 5,000 positions coming to Nashville will work in its new Center of Excellence in roles including supply chain, transportation, customer fulfillment and similar functions.
The city also has a growing financial sector benefiting from Wall Street firms wanting to diversify away from Manhattan. Investment firm AllianceBernstein Holding LP is moving its headquarters and more than 1,000 jobs to Nashville from New York. UBS Group AG in 2013 announced a new back-office unit in the city’s downtown that now employs more than 1,000 people. Nashville’s largest employer is Vanderbilt University Medical Center with more than 20,000 workers.