Tracy Hadden Loh’s scientific contributions

Purpose: This paper tests the popular perception that the storefront location choices of premium brands are positively related to adjacent rents. Focusing on the case of Starbucks, a popular international coffee chain, we examine the association between Starbucks locations and rents in Manhattan, New York. Methodology: We use a multi-year dataset for average rent per square foot for office and multifamily residential properties within 1/10th of a mile of several hundred coffee shop locations in Manhattan, controlling for vacancy, job density, overall amenity density (WalkScore), coffee shop density, transit accessibility, neighborhood, and the Starbucks brand. We take two different methodological approaches to isolate potential statistical evidence for an association between Starbucks locations and adjacent rents: we run a pooled-cross- sectional model and apply propensity-score matching. Findings: We find a statistically significant positive relationship between the presence of a Starbucks and average office rents when applying our pooled-cross-sectional model and applying propensity-score matching. This finding is consistent with several potential causal hypotheses: Starbucks may be attracted to higher-rent office locations; the “Starbucks effect” may cause higher rents in adjacent locations; or, there may be a mutually reinforcing positive feedback between Starbucks locations and office rents. We find no strong association between Starbucks and residential rents (one model indicates an effect of 2.3% on residential rent at 10% level of significance), which challenges the direct linearity of the consumption theory of gentrification popularly called the “Starbucks effect.” Originality: In the literature, the existence, causality, and directionality of a relationship between Starbucks locations and neighborhood change has been largely unstudied. In this paper, we test the hypothesis that there is a positive correlation between Starbucks locations and rents.