The Starbucks Effect Is Cooling Off — What It Means for Southern California Real Estate
For decades, the arrival of a Starbucks in your neighborhood was practically a seal of approval from the real-estate gods. Property values near new Starbucks locations historically outperformed national averages, and investors came to see that green-and-white logo as shorthand for “up-and-coming.”
Between 1997 and 2014, homes within a quarter-mile of a Starbucks rose 96% in value, compared to the nationwide climb of only 60%. That phenomenon became known as the Starbucks Effect and it changed how developers, landlords, and homeowners viewed neighborhood growth.
But now, that trend might be losing steam, especially here in Southern California.
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The Starbucks Effect, Explained
The Starbucks Effect was simple: wherever Starbucks went, prosperity followed. A new store signaled safety, convenience, and rising consumer spending power; all key ingredients for higher property values.
In cities across the U.S., the brand acted as an anchor tenant that attracted investors, higher-income residents, and complementary businesses. For property owners in Pasadena, Arcadia, Monrovia, and Los Angeles, seeing a Starbucks pop up nearby often meant your neighborhood was about to get busier — and your home or rental portfolio more valuable.
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But Things Are Changing…
Starbucks recently announced plans to close hundreds of underperforming stores across North America, cutting roughly 900 corporate jobs. And while the company still operates more than 18,000 stores in the U.S. and Canada, the closures are largely concentrated in dense urban areas — including parts of Los Angeles County, Northern Virginia, Philadelphia, Baltimore, and Washington, D.C.
Even here at home, we’ve seen longtime Starbucks locations shut down across Pasadena, Downtown LA, and the San Gabriel Valley - areas once considered untouchable.
That has landlords and investors asking: “If Starbucks is pulling out, what does that mean for the neighborhood?”
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The Ripple Effect on Local Real Estate
When a brand as recognizable as Starbucks leaves an area, it’s not just about losing a place to grab coffee. It can signal deeper shifts:
Changing consumer habits. More people now work from home, making convenience retail less profitable in certain urban corridors.
Evolving foot-traffic patterns. Once-busy streets are seeing reduced daytime activity, affecting small businesses and local economies.
Retail consolidation. National brands are re-evaluating high-rent districts and focusing on drive-through or suburban locations.
For Southern California property owners, especially those managing mixed-use or multifamily assets, this matters. A retail vacancy can affect not only cash flow but also neighborhood perception and tenant stability.
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So Where’s the Opportunity?
At Fertig & Gordon, we believe this shift isn’t a sign of decline, it’s a chance to rethink what “prime location” really means.
In markets like Arcadia, Monrovia, and Pasadena, neighborhood strength now depends less on national retail anchors and more on local entrepreneurship, service-based tenants, and community engagement. Small cafés, fitness studios, and specialty shops can drive just as much value when paired with smart property management and targeted improvements.
As Starbucks scales back, local investors can fill that gap, by repositioning properties, improving curb appeal, and attracting businesses that resonate with today’s consumers.
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The Fertig & Gordon Takeaway
The Starbucks Effect may be fading, but Southern California’s growth story is far from over. Neighborhoods evolve, markets shift, and opportunity always follows adaptability.
If you own or manage property in Los Angeles County, the Inland Empire, or the San Gabriel Valley, now is the time to analyze your assets, rethink tenant mixes, and plan for the next cycle of neighborhood change.
At Fertig & Gordon, our property management and consulting team helps landlords and investors anticipate these transitions — combining market data, local insight, and decades of SoCal experience to help you stay ahead.
Serving Arcadia, Monrovia, Pasadena, Los Angeles County, and the Inland Empire.
Learn more: [fertigandgordon.com]
