A few weeks ago, I met with clients to discuss their real estate needs and desires.
“We really want a home in an area that will have long-term appeal,” the couple said. “That’s important to us.”
I nodded. “Let’s go get a Starbucks,” I responded.
“What?” They asked, visibly confused. “Why?”
I smiled. “I’ll show you—trust me—but let’s go get a Starbucks and we will talk about the area.”
They conceded, and while it was a strange request from a real estate agent, it was my way of introducing them to what I’ve determined as the “Starbucks Principle.”
When most people seek to buy a home, one of the questions that usually is—and should be—asked first is whether the home will have good long-term value and appreciation. Making a great decision when buying a home means looking at both the short-term and long-term potential of the area surrounding it. What is it like now and what will it look like in the future?
The Starbucks Principle is an easy way to help you judge the potential long-term value and desirability of the area you are considering because it basically states that if you see a new Starbucks being built—or a large expansion/remodel of an existing Starbucks—then that area is likely a good area to buy in. The Starbucks Principle says look for that all-too-infamous green logo (or a few), and you will likely know the value is good now and the potential for continued strength is probable, as well.
So, what does a coffee shop have anything to do with your home’s value? Well, it really is a shortcut for research and data that you can use as a cheat sheet of sorts. Franchises like Starbucks have vast resources to dedicate to gathering information on demographics, population growth, disposable incomes and development, so they know more than the average person. Before a company that size dedicates massive resources and capital, they make sure they know everything they can about the surrounding population, businesses and long-term potential for growth.
Beyond their own in-company resources, they also have large numbers of developers and commercial real estate brokers seeking out their business. To get them to buy or lease in a given location, there has to be a strong amount of data to support the sales and growth potential of the area. They utilize all those resources to make sure they put stores in valuable locations.
Understandably, as much of a dedicated following that Starbucks has, there are also those who dislike (maybe an understatement in some cases) the conglomerate that has become Starbucks in America. Ever heard the phrase “Hate the player, love the game?” While we can all understandably dislike the company, to decide not to take note of the power of the brand and its following could be costly. Starbucks will definitely make sure that the data for disposable income, population projections, business growth and other factors support a new or expanded store—but the addition of a store to an area can actually create growth around it, as well. When other businesses see Starbucks adding a store, they notice and will frequently flock to the area, which, in turn, brings people to retail centers.
Buying a house based solely on the presence or expansion of a Starbucks certainly should not be your objective, but it can serve as a shortcut on research and a reinforcement of your and your agent’s knowledge about a neighborhood or community. Making the best home-buying decision means buying for the long term and knowing that, relative to the rest of the real estate market, you are likely to have the most stable value and resale price in both a seller’s and buyer’s market. The Starbucks Principle can be one additional tool to use when home shopping to help you determine potential stability surrounding your home…and hey, you can grab a coffee while you house hunt, too!
Known as the “Colorado Luxury Expert” Cory Calvin is a professional Colorado real estate agent.
This was originally published on Cory’s blog. Visit the blog daily for housing and real estate tips and trends.