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Nearby businesses and residential real estate values

People who are interested in purchasing a home in Florida may want to consider the location and type of businesses near the targeted residential areas in which they are looking. When certain businesses are located within a mile of a residential area, there is a demonstrated relationship between the business's location and a correlative increase in area home values.

It has been found that this effect is quite pronounced when a Starbucks chooses to locate in a given area. Homes located in proximity to a Starbucks demonstrated a 96 percent increase in value between the years of 1997 and 2013. That value increase is significant when considering the national average for increased value of homes not located near Starbucks during the same time period was around 65 percent.

Similarly, Dunkin Donuts locations demonstrated an increased value for nearby residential real estate, although the value was not as pronounced as that shown by Starbucks. Experts are not certain why a Starbucks location is correlated with such an area increase. It is possible that the growth is due to savvy business planning on the part of Starbucks in identifying neighborhoods that are on the rise. It is also possible that the neighborhood may simply benefit by the proximity of the popular coffee establishment.

People who are preparing to purchase residential real estate may want to consider the types of businesses located within easy distance of the neighborhoods in which they are interested. Understanding the relationship between home values and business locations may aid a person in projecting future value increases. A home purchase may represent the largest single investment many people will ever make. Accordingly, taking the time to carefully assess the neighborhood, the types of businesses located nearby or planned for the future and the relative value increases over time may be an important undertaking.

Source: CNN Money, "The 'Starbucks effect': Higher home prices," Katie Lobosco, 03/04/2015

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