What’s this Frappuccino Effect
According to the analysis of the real estate data from Zillow, published on Quartz, houses and properties that are in the vicinity of a Starbucks store have risen higher in value, and they also appreciated significantly over the years, compared to a regular location with no Starbucks.
A property near Starbucks would have cost $137,000 on average, compared to a property that is not near a Starbucks would have cost $102,000 on average. Similarly, the appreciation for a property close to Starbucks was 96% where as a regular location appreciated 65%.
And this is the case with other whole food chain stores like Dunkin, but not as high as what Starbucks brought in.
So Starbucks drives real-estate prices higher?
Not entirely. At the outset, it looks like Starbucks is the cause, and price growth is the effect. But it’s more than mere causality. It’s the brilliant location selection process, that Starbucks employs when scouting areas to set up their next store.
Starbucks employs different analytical metrics, that are arrived at, using geographical data, area traffic patterns, and businesses nearby along with other locality-specific factors that are relevant. The prices aren’t rising just because of Starbucks. Starbucks is setting up stores in places that are up and coming.