Do Retail Chains Really Boost Real Estate Values?



Jun 3, 2008

A few weeks ago I wrote about my brother-in-law who’d just decided to buy his first home. While I was on a business trip last week, he gave me a quick tour of his new place: a 1920s row house in Washington, D.C.’s Petworth neighborhood with exposed brick, good bones and lots of space. He was quick to point out the hip restaurants that were opening up nearby, as well as a new upscale condo project rising a few blocks away. Such neighborhood developments, he said, were sure signs that the neighborhood was on the up. But then I asked, “How far is it to the nearest Starbucks?”

While reporting on real estate the last few years, I’ve been surprised by how often I’ve heard house-hunters and real estate investors alike talk about the presence or expansion of certain retail chains as a surefire indicator that a neighborhood’s home values were set to spike. One real estate pro told me the perfect place to buy a rental property is a town where Home Depot has just constructed a store and Starbucks is about to move in. Blogger Sarah Gilbert offers similar advice, which she calls “the smartest real estate strategy ever.” “Buy, immediately, in a neighborhood where a Starbucks is planned,” writes Gilbert, who says her own home value doubled shortly after an outlet of the ubiquitous coffeehouse opened nearby. (Of course, since she wrote that in 2006, it’s hard to say how much of her home’s appreciation exists today.)



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