Is There A Relationship Between Coffee Shops And High Rent?

Tyler Durden's picture

Submitted by Priceonomics

The American city runs on coffee. It’s served nearly everywhere, in cafes, restaurants, and corner stores, and it’s an ingrained part of most people’s morning routines. From the distinct taste, to the plethora of ways it can be prepared, to the benefits of caffeine, most people can find an aspect of the drink that they love.

Though while it is common, getting coffee from a coffee shop rather than making it at home can be expensive. It is somewhat of a luxury item, especially if you consider the cost of fancy cafes serving espresso and pour over drinks (generally referred to as third wave coffee). For this reason, some measure of coffee shops could be useful as a barometer of city and neighborhood cost. Our hypothesis is that an area with a greater number of coffee shops would have a population with a larger disposable income, who can also afford more expensive housing.

So, in US cities, are the number of coffee shops and rent prices connected in any way?

We analyzed data from Priceonomics customer RentHop, an apartment listing site,  to explore that question. We have thousands of recent rental listings, which we used to find median rental prices. Then, by connecting that with business data from Datafiniti (also a Priceonomics customer) detailing coffee shops in each city, we were able to highlight the relationship between the two factors. We conducted analysis at the city level, but also completed a deep dive into neighborhoods in Manhattan, NYC. 

At the Manhattan neighborhood level, high rent is positively correlated with coffee shops, but the results nuanced. Generally neighborhoods that were more expensive had a greater number of coffee shops per capita, especially around Midtown. Areas with large concentrations of office buildings have large numbers of coffee shops to cater to office workers (e.g. Midtown Manhattan, Financial District). Other neighborhoods are appealing specifically because they are more residential (and have fewer businesses) and can command higher rents (e.g. Stuyvesant Town-Cooper Village). 

We also examined the number of coffee shops per capita in various cities across America. We found that generally, the number of coffee shops in a city did not correlate strongly with the median rental price, though there were some standout cities like San Francisco with a lot of coffee shops and high rent.

***

For our first look at the data, we want to determine median rental prices for our cities of interest. In our analysis, we will examine cities where there is sufficient data about both rentals and businesses.

Data source: RentHop

New York City has the highest median rent while Atlanta has the lowest. This follows what we would expect, with coastal cities with higher population densities being the most expensive.

Within these cities, we also need to count the number of coffee shops and cafes. Restaurants or corner stores that also serve coffee were not included.

Data source: RentHop

Already we can see that our rankings are very similar to what we had for median rent. New York City is first with over 1,600 coffee shops. The next in our list is San Francisco with 650.

Cities that are larger in general will tend to have more of any kind of business. By adjusting for population, calculating number of coffee shops per 100K residents, we can control for this fact. 

Data source: RentHop

Washington D.C. and San Francisco have the greatest number of coffee shops per capita. Los Angeles has the fewest. New York, which had the greatest absolute number of coffee shops, now sits at the middle of the pack.

Now we will take the two measures, coffee shops per capita and median rent, and plot them together to visualize the relationship.

Data source: RentHop

Overall, we do not see a clear trend supporting the relationship between coffee shops and rent.  We are only looking at seven rental markets so additional research would be necessary to definitely prove the relationship between coffee and rent.

We do, however, have a rich set of data specifically for Manhattan in New York City. Manhattan is divided into 28 Neighborhood Tabulation Areas (NTAs) by the city government. We will group the business and rental data into these geographic areas and complete a similar analysis. 

Now at a more granular level, will we see a clearer correlation between coffee shops and rent prices? Again, our first step is to list median rental prices.

Data source: RentHop

The area of SoHo-TriBeCa-Civic Center-Little Italy has the most expensive median rent. This area is one of the trendiest, with many expensive bars, restaurants, galleries, and boutique stores. Additionally due to history of development in Manhattan, the residential buildings are much smaller, increasing the pressure on price. Marble Hill-Inwood, at the very northern tip of Manhattan and across from the Bronx, is the least expensive. Inwood once had the highest crime rate in Manhattan, but recently has seen a large decrease in crime consistent with New York City overall. It also has a lower median income than most neighborhoods in

We have a map to help visualize the differences in rent. Neighborhoods were split into rent quintiles (five equal sized groups) based on prices.

Data source: RentHopGrey areas do not have sufficient data for analysis

We can see that the areas of high rent are concentrated around the middle of the island especially near Central Park as well as the West Village area.

Next we will look at coffee shops in each NTA. How many coffee spots does each neighborhood have:

Data source: RentHop

Midtown-Midtown South has the greatest number of coffee shops. It has close to double the number of shops as SoHo-TriBeCa-Civic Center-Little Italy and Hudson Yards-Chelsea-Flatiron-Union Square. These areas with many coffee shops either the primary centers of business in the city or areas with lots of shopping and dining (for tourists). Several neighborhoods have 10 or fewer shops. There are a few possible reasons for their low ranking including being a smaller size or having a lower proportion of business in the area. Additionally many of these are neighborhoods with lower incomes generally, which seems like a plausible explanation but cannot be proven from this analysis.

Again we will map this data to help visualize the differences. Similar to the last map, neighborhoods have been placed into quintiles based on the number of coffee shops.

Data source: RentHopGrey areas do not have sufficient data for analysis

Again we see similar concentrations of the neighborhood groups. More coffee shops tend to be around Midtown and the lower-west end Manhattan.

It is clear from the maps of Manhattan though that each neighborhood is a different size. We can also confirm that they have different sized populations. To accurately compare each, we must account for the population in our calculation. We will do this by finding coffee shops per 100K residents, just as we did earlier.

Data source: RentHop

Several of the same neighborhoods are at the top and bottom of our list. The top neighborhood again is Midtown-Midtown South. It has so many more coffee shops per capita than any other neighborhood due to it’s large commuter population and tourist population. Two of the other top four neighborhoods, Battery Park City-Lower Manhattan and Turtle Bay-East Midtown, are similar in nature and comprise areas around Grand Central Terminal and the Financial District.

With our map of Manhattan, we can see if a similar pattern appears in our neighborhood locations

Data source: RentHopGrey areas do not have sufficient data for analysis

In this map, there is more of a clear gradient from the northern tip of Manhattan (neighborhoods with the fewest coffee shops per capita) towards the bottom (neighborhoods with the most coffee shops per capita). This makes sense as we have explained earlier many of the neighborhoods below central park are full of offices and destinations for tourists. The other neighborhoods are more residential in nature, with relatively fewer businesses.

Finally, we will plot the relationship between coffee shops per capita and median rent to understand the relationship. We’ve labeled several neighborhoods to illustrate how different areas of Manhattan fall on the spectrum of coffee vs. rent.

Data source: RentHop

This time the relationship, while still not linear, has a generally positive direction. A few notable outliers include Midtown-Midtown South and Stuyvesant Town-Cooper Village. 

Midtown-Midtown South has more coffee shops per capita than any other neighborhood. As stated earlier, it is largely made up of office towers and tourist destinations. Most of the daytime population is made of up commuters coming into the city from outlying areas (especially NY state, NJ, and CT). This is also where Times Square and other areas where visitors to the city flock. It is most likely that these coffee shops are catering toward these crowds in addition to regular residents and therefore need more locations to keep up with demand.

A neighborhood with very few neighborhoods despite being one of the most expensive is Stuyvesant Town-Cooper Village, a private housing development built after World War II originally for veterans and their families. The area is almost entirely residential, featuring 110 buildings surrounded by public parks. It has become a very desirable neighborhood due to the amenities and location, therefore quite expensive. As it was planned to be entirely residential, the neighborhood does not have the same mix of commercial and residential space as the rest of NYC. This artificially creates a shortage of coffee shops that we do not account for in our hypothesis.

***

It appears that the relationship is somewhat clearer for neighborhoods than cities overall. At the neighborhood level in Manhattan, there is a positive correlation between coffee shops and rental prices.

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order66's picture

“No one knows the basic laws that govern asset markets, so there’s a tendency to use new technologies until they fail, then start over.”

philipat's picture

Sadly, the US defines good coffee as Starbucks and these data are made accordingly. OK fine but Starbucks is not actually good coffee (They over-roast = burn their coffee so as to ensure "consistency" around the world) as those who have tasted really good coffee know. In cities with a REAL coffee culture; Sydney, Australia would be a good example, Starbucks opened and closed within 6 months because the real coffee competition was just too strong and Starbucks just couldn't compete on quality for the same price. There are really really good coffee shops on almost every block. Oh, and they serve coffee and don't, like Starbucks, try to shove their political opinions down your throat with every cup!

stacking12321's picture

shut up, spammer!

 

and an obvious solution to high rents:

ban coffee shops!

Manthong's picture

 

Maybe the better question is…

“Is there a relationship between Democrats, profligate liquor stores and rent defaulters?”.

NoPension's picture

Starbucks tastes like burned shit, to me.

I just thought I was unrefined in my taste. Haha!

McDonalds has better coffee. Royal Farms is great. And a cup of joe at a Waffle House is heaven.

E-Knight's picture

Let's be honest here, the more likely you drink coffee by going to a place like starbucks etc the more liberal-leaning you as a a generality

Manthong's picture

 

Every couple of weeks I grind my own from one of Sam’s better shelves.

I brew it near 115/145 Avgas.

unsafe-space-time's picture

Cafe is a french word for a reason. The more coffee places the more libtards. If everyone that sits around in a coffee shops got executed that would solve all of the worlds problems.

Consuelo's picture

++

 

Verdana (whole bean) is the only one I have ever been able to put down - and it is actually not too bad.   The rest as you suggested, basically smell and taste like they were smoked.

 

 

Paul Kersey's picture

"Sadly, the US defines good coffee as Starbucks and these data are made accordingly."

 

I like local coffee shops, but there is no denying the "Starbucks Effect":

 

"Living near a Starbucks has its benefits for homeowners, whether you're a coffee drinker or not. The value of homes within a quarter-mile of a Starbucks rise faster than those that aren't, according to real estate research group Zillow (Z). With tens of thousands of Starbucks locations in the U.S., that's good news for a lot of homeowners. Between 1997 and 2013, home closer to the coffee shop increased in value by 96%, compared to 65% for all U.S. homes. The biggest "Starbucks effect" was in Boston, where nearby home values went up 171% in the same time period. That's 45 percentage points more than all homes in the city. Starbucks is usually a harbinger of good times for a locality. A new Starbucks gives a sense to developers that the neighborhood is on the rise, wrote Zillow CEO Spencer Rascoff and chief economist Stan Humphries in their new book "Zillow Talk."

 

RealtyTrac studies show that Trader Joes, but not Whole Foods, will also cause nearby real estate prices to appreciate faster than other neighborhoods.

philosophers bone's picture

Are we not confusing cause and effect here?  There ain't overpriced coffee in some hoods because the locals can't afford six bucks for a double venti iced half skinny soy caramel mocha cap frap?

 

swmnguy's picture

Yes, this is a silly exercise in over-intellectualizing the obvious, but it's a fun thing to do on a Sunday morning so why not.

The coffee shops follow the high rents into a neighborhood, and once there, they start reinforcing the high rent.  Young adults will seek out a neighborhood that balances cost of living with convenience of access to where they work.  You'll pay more in rent to live where you don't need a car or a long commute.  So you live in a high-rent area and you're on foot.  Coffee shops will do well there.  And a good coffee shop, or even Starbucks, is a neighborhood amenity that makes one block more desirable as a place to live than another.

One might as well wonder if payday lenders correlate to low-rent areas.  I would imagine they do, for the reverse set of reasons.

all-priced-in's picture

Next,  let's prove that a long line at the car wash makes it sunny.

 

 

Mr T's picture

Blah, blah, blah, ba blah ba

Overall, we do not see a clear trend supporting the relationship between coffee shops and rent.

Thank you for choosing our service. Please remit $250,000 as per our agreement.

This is like government work or sumptin 

Crisismode's picture

Fuck Starbucks

and all the

flaming Liberal Assholes

who go there.

 

philipat's picture

1. So many words and Charts to reach such a stunning non-conclusion

2. Who gives a shit? Is anyone going to go and count coffee shops and survey the population before renting a place and, if not, what is the point of this article? OK it's weekend.

Lucretius's picture

Yep, BFD, Is this what statisticians do with their spare time? I want my two minuets back!

lasvegaspersona's picture

So....proximity to government money correlates with coffee use?...

Supafly's picture

Yep, except LA.  I think they fill that gap with cocaine.

Anteater's picture

Is there anything better than a Starbucks green tea latte, sipping in the warm, hazy

sun on the free internet, watching classy people walk by, while you surf on Reddit??

 

I will drive miles out of my way for a Starbucks 15 minute mediation break from the

absolutely wrenching grind that clientele work has become in the last several years.

Cut your price, improve your product, look back, you're doing twice more, for half,

and still work is slowing down! Drive, drive, drive stuck on a freeway parking lot, to

waste a precious hour of your life pitching some client you know will steal your sitrep!

 

No, my friend, rents have nothing to do with coffee shops, but relaxation sure does!

WINNING!! https://ibb.co/kHsnpv

Normalcy Bias's picture

Thanks for the paid advertisement.

The Cafe Americano is the only non-burnt and/or overly acidic coffee drink I've ever found at Starbucks.

swmnguy's picture

The first time I went to China, I woke up about 5:30 AM local time, totally disoriented (there's a pun in there somewhere) by the 13-hr. time difference.  I saw a Starbucks outside my hotel window and thought, while it's hardly authentic/local, a foo-foo coffee might help me gather my wits.  So I got dressed and went over there.  It didn't open until 9:00 AM.  Something got lost in the translation.  There were lots of old people doing Tai Chi or something, walkers, runners, people with pets.  They were drinking tea out of plastic bags with straws, being sold at pushcarts.  Coffee in the morning to start the day didn't seem to interest them that much.

JBilyj's picture

This article sucks and doesn't extrapolate for the rest (or Middle) America. Why is this article on ZH?

Catahoula's picture

Who gives a shit , coffee houses and high rent? Cmon

Horse Pizzle's picture

The relation is between Miller Lite, malt liquor singles, and low rent.

TeamDepends's picture

Precisely.  If you see Night Train and Cold Cock bottles strewn on your sidewalks, the hobosexuals at the coffee shop are the least of your worries.

Omen IV's picture

please do the same analysis for whore houses

thank you

SantaClaws's picture

Did you factor in the historical number of holdups and other serious crimes in each neighborhood?  Did the coffee shops have places to sit, wi-fi, and outlets for free battery recharge?  Was there a nearby MTA stop to each cofffee shop?  Do racial or ethnic factors affect this?  Etc.

Yen Cross's picture

  The option Vol.[curve] on eur/usd going out 30 and 60 days is moving higher.

  Pain is coming< Bitchez

Pollygotacracker's picture

Must be a slow news day. 

Salzburg1756's picture

A population of coffee-colored people correlates with low rents.

OTMPut's picture

And the ignobel award for the year 2017 goes to ...

OTMPut's picture

And the ignobel award for the year 2017 goes to ...

I Write Code's picture

I have an astounding study showing the correlation between rich people and money, but there just isn't space in this little box to post it.  Work continues on a proof of just why the ocean is located near the shore.

Yen Cross's picture

   Is there a relationship between coffee shops and student loans?

 I wonder if Wells Fargo and Banco Santander have payed predatory plants, #@Starfucks?

yellowsub's picture

have they done a correlation between corner store bodegas liquor stores and the ghetto?

Silver Savior's picture

Ironically I am sitting in a Starbucks now. It's quite nice and relaxing.

hoist the bs flag's picture

fuck you!

 

drink a grande and HAIL TRUMP ZH fucker

swmnguy's picture

Whenever I go to Starbucks, I order either a Small, Medium, or Large.  I get corrected in a snooty manner far less frequently than used to be the case.

I wonder if somebody wants to do some sort of statistical and cultural analysis about why that is.

Silver Savior's picture

Not so fast. I go to coffee shops twice a day usually but you need to see what I buy. I get away with a $2.89 large drip coffee at one place and a large drip coffee at $2.45 at the other place. I never buy food items and never buy anything other than drip coffee. The cost is nothing because I also use wifi and spend two hours in each one in-between working. 

So I go but I am not really spending. 

KimAsa's picture

U can recycle your cup at the first place for a 0.50¢ refill at the second place.

Silver Savior's picture

In theory that could probably work but the first coffee shop I go to is not a Starbucks. Good idea though. We do have three Starbucks in town.:)

Gregor Samsa's picture

The common demoninator is "idiots." Idiots will pay $5 for a 50 cent coffee. Idiots will also pay $500K for a $50K condo. Any place that offers both overpriced coffee AND overpriced condos is mecca for idiots. 

We need a lot more interest rate hikes to kill off these roaches.

VIS MAIOR's picture

yes they are brainwashed - its something coooll drink expensive cofeee .  . 

Tests stop drinking coffee,, yes first weeks are desperate but after you will feel better and more peaceful. it will also improve your reactions because caffeine kept the body in constant tension.You will be more relaxed after. 

Consuelo's picture

++

 

 

I'll see ya & raise ya a currency crisis...