Coffee and Rents
It's not just Starbucks that has this effect. The opening of other popular chains in an area can also impact rents. Check out our articles coming soon on the effect of certain supermarkets on a local area.
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London has one of the highest concentrations of the Seattle-based company - Starbucks - anywhere in the world. To give you an idea of exactly how many, there are about 120 Starbucks within 3 miles of the Bank of England in the heart of the City.
The popularity of the coffee chain provides a great indication of an area's prosperity. Although during recent times the economic gloom has had a negative impact on the company's revenues and caused the closing of some stores, the company's profits are back on the up. With the upcoming Olympics, Starbucks plans to invest £8m to revamp 70 of its London stores.
So, how does this all impact rents? Well, our analysis has shown that for every 0.5 km a property is located from a Starbucks, the rent falls by an average of 20% up to 2.5km away. For properties that are 2.5km away or further from a Starbucks, rents fall by an average of 10% for every 0.5 km further they are.
Admittedly, Starbucks only chooses locations with a dense population of residents with high disposable incomes- the swarms of analysts at Starbucks certainly do their homework!
Furthermore, the opening of a Starbucks in an up-and-coming area helps attract other higher-end businesses, which in turn increases the influx of more well-to-do residents. As such rents start creeping up: people that request a caramel macchiato with an extra shot just won't make do with simple fixtures and fittings. They're after high-spec pads with all the mod cons and are happy to pay the prices.
So, next time you look for a property, see where the furthest Starbucks is to check if the weekly rent being asked is about right!
Not a big Starbucks fan? Where would you go for the best coffee in London?