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Starbucks Effect: Will Closings Hurt Home Values?

Date:July 7, 2008 | Author:Diane Tuman | Category:Real Estate

Coffee giant Starbucks was admired for its real estate acumen for installing stores in prime locations throughout the globe. The Starbucks brand and the demographic that it attracts is so revered that to have a Starbucks store in a neighborhood, means area homes prices go up in value. So, with 600 Starbucks stores closing in the next year, homeowners can only hope and pray that their area Starbucks won’t be among the 600.

Starbucks’ biggest mistake was to place their stores too close to one another — some within a mile of each other and the other trouble spot brokers and analysts point to is the housing crisis. Many of the newer Starbucks stores were built in areas of expected population growth that never took off. In this case, Starbucks was ready for takeoff, but the real estate market didn’t follow.

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Responses (13)

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Richard Johnston, Sherman Oaks Homes 2:26 AM - Jul 8,2008

I doubt they are going to be closing any stores here in the San Fernando Valley. Well…at least not the busy ones.
Jim Duncan 3:53 AM - Jul 8,2008

I see this as an opportunity for independent coffee shops to pick up the slack left by Starbucks. SB has already made the coffee culture ubiquitous so much so that there will likely be a void left when they close.

When I define “self-sustaining areas” for my clients, a coffee shop is one of the criteria; but my area isn’t as inundated/infested with Starbucks as are many other areas.
skeptic 7:41 AM - Jul 8,2008

“to have a Starbucks store in a neighborhood, means area homes prices go up in value.”

wow. talk about really, really bad science….home prices went up for a multitude of reasons, the proximity to an overpriced trendy spot would hardly be a valid reason.

The store was placed there BECAUSE the home prices were ALREADY expected to increase.
Adam 8:34 AM - Jul 8,2008

Yes, I’d agree with other comments. I don’t see a few Starbucks stores closing having any measurable effect on home prices. That is, unless Starbucks is the only coffee place in your town.
Riley Smith | Coconut Grove Realtor 1:06 PM - Jul 8,2008

I agree that the two may be related, but not in the way that Starbucks says. I think that the housing crisis caused our economy slump, which has caused people to spend less, i.e. stop buying $6.00 cups of coffee.
I disagree that Starbucks stores closing will hurt home values.
mr. big 12:00 AM - Jul 9,2008

It’ll be hard to tell if home prices are hurt because the Zillow Heat Maps have been down for months.

It’s shameful that this feature is still touted on the Zillow website, even though it is no longer available.

Have other readers seen similar functionality on any other sites?
Priya 8:25 AM - Jul 9,2008

I don’t think that closing of Starbukcs stores will affect anything. It might, infact, create some opportunities.
David G from Zillow.com 11:45 AM - Jul 9,2008

mr. big -

It wasn’t an easy decision. Ultimately, we realized that the improvement to our maps with the switch to Virtual Earth was more compelling from a users’ perspective than maintaining the old maps with heat maps. I hope that you understand. We do plan to bring back the heat maps but to set realistic expectations, that work is not yet scheduled.
mr. big 9:18 PM - Jul 10,2008

David G,

Thanks for the response. So when is the section of the website touting heat maps coming down? This is exasperating to users who spend lots of time trying to figure out what they’re doing wrong because they can’t get heat maps to come up.

Very frustrating from the end-user point of view. Seems like there’s more daily content and updates on the Zillow blog than there is on the actual Zillow site.