This afternoon I was chatting with some friends about Toronto real estate (which is something that happens a lot in this city), and we started talking about “The Starbucks Effect.”
Basically, we were talking about how this neighborhood just got a Starbucks and how that neighborhood already has one. We were, like a lot of people, using Starbucks as a proxy for neighborhoods that are emerging and neighborhoods that have already arrived.
There’s been a lot of discussion about the correlation between home prices and the presence of a Starbucks. But the big question is what comes first: the home prices or the Starbucks?
Earlier this year, the CEO, Spencer Rascoff, and Chief Economist, Stan Humphries, of Zillow.com argued that the mere presence of a Starbucks can cause gentrification.
They argued that Starbucks knows the next hot neighborhood before anyone else does and that they are “the fuel, not the follower.” And through their data they demonstrated that homes (in the US) near a Starbucks appreciated significantly faster than homes not near a Starbucks, or even homes near other coffee shops such as Dunkin’ Donuts.
But I – as well as others – wonder if this isn’t an oversimplification.
I certainly believe that Starbucks could help fuel home prices in a neighborhood. I think it gives people a comfort level that the neighborhood has arrived and that there are people in the area who are willing and able to spend money on discretionary items.
But I suspect that for Starbucks it’s a balancing act. They would never want to be late to an emerging neighborhood (and miss that prime corner property), but they also don’t want to be in the business of placing bets on neighborhoods with very few vital signs.
So I think it’s both. I think Starbucks is analyzing the data and watching home prices like a hawk (the follow) and when it reaches a certain point, they move. And that likely causes a further acceleration of neighborhood change (the fuel).
What do you think? I would love to learn more about their site selection process.
- by rinatus (rinatus) on 500px
Today I’m thinking about extraversion and third places within cities.
As many of you I’m sure know, the idea of a third place is that after your home (first place) and your work (second place), cities have what are known as third places. This could be a coffee shop, a barber shop, or a public space (to name only a few examples).
This, of course, is not a new idea. For decades people have been arguing that third places are essential for establishing a sense of community, place, and belonging. In fact, this emphasis on third place is one of the ingredients that made Starbucks so successful.
But with the rise of the internet and freelancing, third places are becoming even more important. That’s why coffee shops have become arguably the best example of a third place in today’s cities. They’ve even become the new second place for some (many?) people.
But beyond just a place to meet and socialize, I’ve been thinking today (while I was at a third place) about the psychological benefits of these spaces.
For example:
One of the key differences between extraverts and introverts is where they draw their energy from. For introverts, they tend to draw it from within. In order to recharge, they often feel the need to retreat and be left alone. Extroverts, on the other hand, draw their energy from the outside world. They charge up by being around other people.
When I was completing my MBA at Rotman, one of the things they had us do at the beginning and at the end of the program was complete the Myers-Brigg personality test.
In both instances, I was as extroverted as they come (I am consistently what is known as an ENTJ). And from experience, I can say that I definitely feed off the energy of other people.
But the interesting thing about this – to tie both of these topics back together – is that there appears to be a clear correlation between extroversion and a preference for living in urban centers. And given what I just said, that probably makes sense to you.
So if you too classify yourself as an extroverted person, then third places are more than just a busy coffee shop or a vibrant public space. They are where you derive your energy and where you feel alive. And that’s a pretty powerful thing in my view.
Back in 2011, blogTO ran an article calling Geary Avenue one of the ugliest streets in Toronto. And it’s certainly up there. It’s an industrial street with a mixture of different building types (lots of autoshops), giant power lines running along the south side of it, and a railway disconnecting it from the city to the south.
But as somebody who used to live around the corner from this street, I’ve had my eye on it for a number of years. Despite the fact that it was never very pretty, it always felt like an area with lots of potential. And sometimes it’s the areas that seem most unlikely to gentrify, that end up doing exactly that.
Probably the first signs of hipness came with the opening of places like Kitch Bar on Geary Avenue and Actinolite on Ossington Avenue. More recently though, it was announced that Dark Horse Espresso will be opening on Geary and that Bellwoods Brewery will be opening their second location on Dupont Street in this incredible building:
So whether you call it Dovercourt Park, Dovercourt Village, or some other name, I think it’s only a matter of time before Ossington cool moves north and the area in and around Dovercourt Road and Dupont Street becomes one of the hippest areas in the city. Get ready.
Full disclosure: I own a house very close to this neighborhood.
Images: Actinolite and Bellwoods Brewery