The “Starbucks Effect” Is Fading: Why Home Values Near Closing Coffee Shops Could Take a Hit

Blog Kristi Jenkins October 24, 2025

For years, real estate experts and investors have talked about the “Starbucks Effect”, the idea that homes located near a Starbucks tend to appreciate faster than others. In fact, a widely cited study from Zillow found that between 1997 and 2014, homes within a quarter mile of a Starbucks appreciated by 96%, compared to 65% for other homes.

But as consumer habits change and coffee chains like Starbucks face strategic closures or slower expansion, this once-reliable real estate trend is showing cracks. The Starbucks Effect may be ending, and the ripple effects could be significant, especially for homeowners and investors banking on that extra boost in property value.

What Was the “Starbucks Effect”?

The concept was simple but powerful: when a Starbucks opened in a neighborhood, it signaled up-and-coming potential. Buyers, developers, and renters interpreted the arrival of the green siren logo as a vote of confidence in the area’s desirability, safety, and long-term value.

Starbucks didn’t just serve lattes, it served as a status symbol for neighborhood revitalization. Homebuyers often paid a premium for the convenience, walkability, and perceived prestige of living near one.

But now, things are shifting.

Why Starbucks Is Closing Stores (and What It Means)

Starbucks has begun closing hundreds of underperforming stores across major U.S. cities, citing changes in consumer behavior, safety concerns in certain markets, and the rise of mobile ordering and drive-thru demand.

In some urban areas, especially where foot traffic has dropped post-pandemic, these closures can signal something larger:

Decreasing neighborhood foot traffic
Economic slowdowns in commercial districts
Declining perception of local desirability

For homeowners who once benefited from the Starbucks Effect, this shift can have the opposite impact, what some analysts are calling the “Reverse Starbucks Effect.”

The Reverse Starbucks Effect: When the Icon Leaves

A closing Starbucks doesn’t just mean one less coffee stop. It can subtly influence how people perceive the neighborhood’s vitality.

Here’s how that can affect property values:

Perception of Decline: When well-known chains shut their doors, it can suggest economic weakness or shifting demographics, discouraging buyers and investors.
Reduced Foot Traffic: Fewer people in the area means less business for nearby shops, potentially leading to more closures.
Diminished “Lifestyle Appeal”: Walkability and access to amenities are key selling points. Losing a popular coffee shop can slightly weaken a neighborhood’s lifestyle score.
Lower Demand: Homes that once had a “Starbucks premium” might lose part of their perceived value, especially in dense urban markets where amenities are a major draw.

How Big Is the Impact on Home Prices?

While it’s unlikely that a single coffee shop closure will tank your home’s value, localized patterns matter. If multiple commercial spots in the same area close or if a neighborhood loses its trendy appeal, the effect compounds.

According to real estate analysts, neighborhoods that lose multiple well-known retail anchors could see home values stagnate or appreciate more slowly compared to comparable markets.

In contrast, suburban areas with drive-thru Starbucks locations and stable traffic flows are holding stronger. This reflects a broader trend: consumer convenience is replacing urban cool as the new driver of real estate demand.

What Homeowners and Buyers Should Watch

If you live near or are considering buying near a Starbucks (or any major retail anchor), keep these factors in mind:

Monitor local retail activity: Are businesses opening or closing nearby? Retail trends can often foreshadow neighborhood shifts.
Look beyond the brand: Focus on walkability, access to multiple amenities, and strong local schools, those remain enduring value drivers.
Invest in stable submarkets: Suburban and small-town areas with consistent consumer demand tend to weather retail shifts better than urban commercial zones.
Don’t panic-sell: A single closure doesn’t define your property’s worth. Real estate value is multifaceted, location, schools, and local inventory still play the biggest roles.

The Bigger Picture: A Shift in Real Estate Signals

For years, Starbucks was more than a coffee shop, it was a cultural and economic barometer. Its presence suggested growth, stability, and gentrification.

Now, as the brand recalibrates for a digital, post-pandemic economy, its closures may signal a new era in real estate valuation one driven less by lifestyle branding and more by practical livability, hybrid work trends, and evolving consumer habits.

The next “Starbucks Effect” might not come from a coffee shop at all, it could be sparked by co-working hubs, electric vehicle charging stations, or even local farmers’ markets that bring people together in new, modern ways.

Final Thoughts

The end of the Starbucks Effect doesn’t mean the end of neighborhood desirability, it just means the metrics are changing. Homebuyers and investors who pay attention to emerging lifestyle signals rather than legacy brands will be better positioned to identify the next wave of rising neighborhoods.

Because in real estate, trends may fade but opportunity always brews anew.