Exploring the Starbucks Effect on Rental Property Investments: Insights and Data

[David Hanson]

Hello Real Estate Investors!

Today, we're diving into a fascinating topic: the influence of Starbucks on rental property values. Known as the "Starbucks Effect," this phenomenon suggests that proximity to a Starbucks can significantly impact real estate values. Here's why this matters to us as investors:

1. Property Value Appreciation: Research by Zillow found that homes near Starbucks locations appreciated 96% between 1997 and 2014, outpacing the general real estate market's 65% jump. This suggests that proximity to Starbucks can be a strong indicator of property value growth​​.
2. The Starbucks Principle for Real Estate: While it shouldn't be the sole factor, proximity to Starbucks can be a strong indicator of neighborhood stability and potential for long-term value. It's a helpful tool in assessing the long-term potential of a property​​.
3. Market Research and Location Strategy: Starbucks spends heavily on analytics and research to choose profitable locations. They look for areas with promising demographic, income, and economic metrics. As investors, we can use Starbucks' location choices as a proxy for strong market potential​​.
4. Comparative Effects of Other Retailers: It's not just Starbucks. Properties near specialty grocery stores like Whole Foods and Trader Joe's also show higher value appreciation. This broader "Retail Effect" underscores the impact of certain retail establishments on property values​​.

Discussion Points:

• Have you considered the proximity to Starbucks or similar retailers in your investment decisions?
• How do you weigh this factor against other considerations like school districts, crime rates, and local amenities?
• Are there any success stories or cautionary tales from your experience related to this phenomenon?

References for Further Reading:

• Mental Floss - Starbucks Effect on Home Values
• RISMedia - The Starbucks Principle in Real Estate
• AIP Commercial Real Estate - The Starbucks Effect

Looking forward to your insights and experiences!

Personally, my rental portfolio all falls within 5 miles of a Starbucks. I did not do this on purpose honestly but glad that it worked out that way. These articles linked above have given me positive reinforcement and education for future location consideration.