Does Starbucks brew higher home values?

02/09/2015

Does Starbucks brew higher home values?

NEW YORK – Feb. 5, 2015 – The arrival of Starbucks' coffee shops may indicate where higher home values will soon surface, according to a new analysis by Quartz, a digital business publication of the Atlantic Media Company. In fact, Quartz claims that "Starbucks equates with venti-sized home-value appreciation. Moreover, Starbucks seems to be fueling – not following – these higher home values."

The company compared a database of Starbucks locations with Zillow housing data, tracking home values within a quarter mile of Starbucks to houses slightly farther away over a five-year period after a Starbucks location opened.

Homes closest to Starbucks appreciated a little more than 21 percent over five years, while the homes slightly farther away appreciated just less than 17 percent.

Could it just be a coffeehouse effect? Homes near Dunkin' Donuts reflect a similar trend, but they don't tend to appreciate as fast as properties a quarter-mile from a Starbucks, Quartz notes. Between 1997 and 2012, homes located near Starbucks and Dunkin' Donuts followed similar trends in rising home value appreciation. But during the recent housing recovery, homes near Dunkin' Donuts have appreciated 80 percent since 1997, whereas homes near Starbucks have appreciated 96 percent, nearly doubling their value.

"Although some may scoff that the predictive value of a given retail chain doesn't mean much, locations near Starbucks are, indisputably, highly lucrative," Quartz argues from its analysis. "True, properties near Starbucks locations tend to start out more expensive. … Maybe Starbucks and Dunkin' Donuts are just waiting for a neighborhood's property values to heat up before moving in and setting up shop. What's to say that Starbucks is the cause, rather than a consequence, of higher home values?"

But Quartz maintains from its study's findings that homes near Starbucks tend to appreciate at a faster rate than U.S. housing as a whole, and are recovering much more quickly from the housing bust.

Arthur Rubinfeld, who oversees Starbucks' location selection process, says that the company has about 20 analytics experts around the world scouring maps and geographic information systems data to assess an area's traffic patterns and businesses.

"The beauty of Starbucks is our understanding of real estate site locationing," Arthur told Quartz. "It's an art and a science."

Source: "Are Starbucks Fueling America's Increasing Home Prices?" HousingWire (Jan. 30, 2015) and "Confirmed: Starbucks Knows the Next Hot Neighborhood Before Everybody Else Does," Quartz.com (Jan. 28, 2015)

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