Starbucks And Local Real Estate Prices


Starbucks locations correlating directly with rising home values

Starbucks, the iconic coffee roaster and retailer, plays a fascinating role in the real estate market.

The ubiquitous franchise boasts over 19,000 locations in more than sixty countries, utilizing a real estate analytics team to carefully determine where to put the next Starbucks location. This careful analysis of data has led to Starbucks locations correlating directly with rising home value for homeowners in close proximity.

By comparing Zillow data with a database of Starbucks locations, it is clear that they equate with significant home value-appreciation.

“Locations near Starbucks are, indisputably, highly lucrative…How do we know this has anything to do with Starbucks?”

By examining another prominent coffee chain—Dunkin’ Donuts—we can see that homes in close proximity reflect a similar historical trend. However, even these fail to appreciate as rapidly as those within a quarter-mile radius of Starbucks.

Between 1997 and 2012, the values of the homes now located either of the two coffee chains followed similar historical trajectories. However, “homes near Dunkin’ Donuts have appreciated 80 percent since 1997 whereas homes near Starbucks have appreciated 96 percent, almost doubling their value”.

Historically, Starbucks locations have clustered on the coasts, the Midwest, and in urban areas. This begs the question: “Is Starbucks the cause of, or the consequence of higher home values?”

Through thorough analysis of our data, we were able to determine impressive correlation between Starbucks-adjacent homes and other homes nearby. The values of the homes within a quarter-mile ring of Starbucks locations appreciated “a little more than 21 percent over 5 years, while the houses slightly farther away appreciated just less than 17 percent”.

The bottom line is that people are paying premium dollar for homes near Starbucks. Furthermore, Starbucks itself is the driving force behind the increase in adjacent home values.

We spoke with Arthur Rubinfeld, the overseer of Starbucks’ location-selection process, and members of his team. They explained the structure of their team: “…they have twenty or so analytics experts around the world poring over maps and geographic information systems data—assessing factors like an area’s traffic patterns and businesses—the company also empowers dozens of regional teams to come to their own conclusions…’The beauty of Starbucks is our understanding of real-estate site locationing…an art and a science’”.

Also noted were homes near Trader Joe’s and Whole Foods appreciate faster. Homes within a mile of either high end grocery store begin appreciating faster than other homes after the stores open, Zillow has discovered.

“The grocery store phenomenon is about more than groceries,” said Rascoff. “It says something about the way people want to live – in the type of neighborhood favored by the generations buying homes now. Today’s homebuyers seek things in neighborhoods that weren’t even in real estate agents’ vocabularies a generation ago: walkability, community, new urbanism – and maybe we should add words like sustainable seafood and organic pears.”

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