Does the arrival of retail establishments increase property prices within that same area? Of course chic, boutique- and bistro-filled neighborhoods have higher property values than less-vibrant areas. But what about large national retail stores? There is one particular company that has a proven track record of revitalizing neighborhoods and jump starting development: Whole Foods Market. A Whole Foods Market will open its first store in Savannah on Aug. 13, more than a year ahead of schedule. Atlanta-based developers Knightswood and S.J. Collins Enterprises demolished Backus’ trademark pink buildings on Victory Dr. and several neighboring structures to construct the Victory Station shopping center. Whole Foods is the anchor to the center which will also have a PetSmart , and a handful of small retailers.
Increasing The Value of Property
Whole Foods. Across the country, the healthy food retailer, is widely credited with reinvigorating formally undesirable neighborhoods, creating demand for housing and bringing in customers to adjacent businesses. While most evidence is anecdotal, all accounts indicate that the arrival of a Whole Foods is a sure sign that a neighborhood is about to turn around, or increase the value of the already well established neighborhoods. This “seal of approval” quality is Whole Foods’ Midas touch, potential gentrifiers see it as something tangible that certifies a neighborhood as a quality buy. And not just residents; businesses too, look to Whole Foods as a disciplined pioneer that does its homework. Its most basic criterion is reportedly 200,000 people, a good portion of them college educated, living within a 20-minute drive. Shortly after the announcement of the arrival of the food retailer, Chick-filet, and a Zaxbys constructed and opened their doors within ½ mile of Whole Foods. Perhaps they heard the food retailer was coming to town.
The Whole Foods Effect
Communities such as East Liberty in Pittsburgh, Logan Circle in Washington, DC and Uptown New Orleans all experienced development booms following the arrival of Whole Foods. The Austin, Texas-based food retailer has made a science of putting down roots in urban locations at what often seems to be just the right moment. The company is so good at the real-estate game that it has spawned a catchphrase, ‘the Whole Foods Effect’. A report in 2007 by a Portland-based firm showed that the presence of a specialty food retailer (i.e. not a typical grocer) increases home prices by anywhere from 6% to 29%. An exhaustive 2007 study by Johnson Reid quantified the effects that individual urban amenities have on home prices. Using hedonic modeling, it found that a specialty grocer will increase surrounding home prices by an average of 17.5 percent, more than bookstores, bike shops or gyms (with the caveat, of course, that this varies greatly depending on the situation — in the instances studied, the increases ranged widely from 6 to 29 percent).
Now Could Be The Time To Buy
The Whole Foods Effect isn’t caused by the store itself, it’s caused by the events it sets into motion. And one thing Whole Foods does is stay open later than a lot of the other shops around it, laying the groundwork for expanding the length of that neighborhood’s day. Greg Badishkanian, an analyst with Citigroup who tracks Whole Foods, said in a 2006 NPR story, "When Whole Foods opens up a store in a particular market, all of the real estate in the area gets a nice uplift. It could be a few percent to 10, 15, (and) 20 percent in terms of the real estate value." So if you are an investor or looking to buy a new home, perhaps now is the time to look in Parkside, Ardsley Park/Chatham Crescent, or the Victory Heights area. It looks like the home prices in these neighborhoods are going to increase if ‘the Whole Foods effect’ theory holds up.