Starbucks, the iconic coffee roaster and retailer, has grown into a $15 billion company, with more than 19,000 locations in more than 60 countries. You can spot that familiar green-and-white logo from Saudi Arabia to Switzerland, in a Dubai shopping mall, or on a Carnival Cruise ship. Where the Berlin Wall once stood, there’s a shiny new Starbucks instead. Conveniently, one of our desks has a view of the original Starbucks store in Pike Place Market.
Starbucks’ mission is “to inspire and nurture the human spirit—one person, one cup and one neighborhood at a time.” Any college student downing venti caramel macchiatos to stay awake the night before a big exam can testify to Starbucks’, in a word, nurturing qualities. But as it turns out, Starbucks correlates with something else, too: rising home values.
To explore exactly how closely the two correlate, we compared a database of Starbucks locations with Zillow data. And since Starbucks’ corporate headquarters in Seattle is located just a few miles down the road from Zillow, we also took the opportunity to pay our neighbors a visit, and to pick the brains of Starbucks’ own real estate analytics team—the whizzes who determine where to put that next Starbucks location.
Here’s what we can tell you: Starbucks equates with venti-sized home-value appreciation. Moreover, Starbucks seems to be fueling—not following—these higher home values.
What does that look like in practice? Let’s look at the historical home value appreciation of areas that now are located within a quarter mile of a Starbucks. A home that is now near a Starbucks would have sold, on average, for $137,000. A home that is not near a Starbucks would have sold, on average, for $102,000.
Fast-forward 17 years to 2014. That average American home has now appreciated 65%, to $168,000. But the Starbucks-adjacent property has far outpaced that, appreciating 96% to $269,000.
“Try some decaf,” you may be thinking. “Home prices rise and fall for a lot of reasons. How do we know this has anything to do with Starbucks?” For instance, maybe this isn’t a Starbucks Effect at all. Maybe it’s just a coffeeshop effect.
To examine that possibility, we took a look at another prominent coffee chain, Dunkin’ Donuts.
What did we learn? Homes near Dunkin’ Donuts reflect a similar historical trend. But while they appreciate faster than the nation’s housing as a whole, they still don’t appreciate as fast as properties that are now a quarter-mile from a Starbucks.
In fact, between 1997 and 2012, homes now located near Starbucks and Dunkin’ Donuts followed similar historical trajectories, substantially outpacing the overall home value appreciation. But their paths diverged during the recent housing recovery such that, today, homes near Dunkin’ Donuts have appreciated 80% since 1997 whereas homes near Starbucks have appreciated 96%, almost doubling their value.
I get the sneaky suspicion that the so called “Starbucks effect” is really just another way of saying “the white people effect.” Doesn’t take a skilled anthropologist to figure out that white folks LOOOVVEE Starbucks. I’ve been sitting here for ten minutes trying to think of something that’s whiter than Starbucks and short of hummus and pure barre classes I’m having a hard time thinking of something that even comes close. Walk into any Starbucks from here to Seattle and all you’ll see is a whirlwind of VS Pink and Apple products. So I guess if I’m an executive at Starbucks, I’m not necessarily going to be too keen on taking the brand to the mean streets of Compton. Expanding the business is great and all, but putting three new units in the Barrio probably isn’t going to be a smash hit. It’s all about sales, people. Money makes the world go round, and if the fine folks at Starbucks are really all about that paper, they should just stick to what their doing. Find a neighborhood that’s so white you could probably make the color available for purchase at Sherwin Williams and hustle frappe chinos to white chicks like rock to a crack fiend.