Landlords are likely to choke on their morning cup of joe—Starbucks is leaving neighborhoods en masse, and the repercussions could echo around the rental real estate market.
Rental property owners usually breathe a sigh of relief at the sight of Starbucks’ familiar green-and-white awning in a neighborhood they have invested in or are considering. A popular train of thought is, “If Starbucks customers can afford to pay $5 for a cup of coffee, they can afford to pay me rent.” Landlords can also be confident that, in addition to regular rental income, their property values will increase.
That’s not idle speculation. There’s a term for it: the “Starbucks Effect,” coined by Zillow after a 2015 report found that between 1997 and 2014, homes within a quarter-mile of a Starbucks increased in value by 96%. Of course, home values throughout the country appreciated during that period, too, but by 60%, not 96%.
Why Starbucks Is So Influential to Real Estate Values
Starbucks is considered a reputable company with upscale clientele. When one lands in a neighborhood, it’s as if the real estate gods have given the area a seal of approval, signaling for other brands, residents, and investors to follow suit.
Hannah Jones, senior economic research analyst at Realtor.com, explained it this way:
“The presence of the café could then add to the area’s appeal, along with the other factors that convinced the company to open the location to begin with. Put differently, Starbucks doesn’t cause home values to rise on its own; instead, it tends to open stores in neighborhoods where other factors, such as economic growth, rising demand, and increasing property values, are already at play.”
Todd Drowlette, a former…