Specialty grocery stores could boost nearby home values, raise rents

Specialty grocery stores are popping up in Southwest Florida and they are bringing more to the table than just your dinner.

Developer Jeff Garrison with SJ Collins Enterprises helped bring Whole Foods stores to cities all along the east coast and most recently, to South Fort Myers.

“It is an amenity-base for those residents just like a pool or fitness would be,” Garrison said. “This is something that they [communities] look for and want to be close to.”

Along with the added benefit of bringing more options to people in a community, a number of studies found specialty grocery stores can increase home values.

Dubbed the “Whole Foods Effect,” the phenomenon includes all specialty grocery stores like Trader Joe’s and The Fresh Market. A study by Zillow, an online real estate marketplace, shows living near one of these stores, could boost your home value.

“They [specialty grocery stores] tend to identify areas that are just on the cusp of transforming,” Aaron Terrazas said, a senior economist at Zillow. Its analysis shows within the first two or three years after a store opens, people living within a mile radius can see their home value appreciate 8 to 10 percent higher than other homes.

“What this tells us is that it’s not just Trader Joe’s or Whole Foods picking good locations, there is some effect after the open,” Terrazas said. “Things change on the ground materially.”

A study from 2007 shows living near a specialty grocer could boost your home value by roughly 17.5 percent.

“I like that,” Larry Kussmaul said, who lives behind the new Whole Foods store in Lee County. “I don’t know who wouldn’t.”

But the rise in values probably isn’t good news for renters.

“They [renters] don’t have an equity stake in that neighborhood,” Terrazas said. “So renters sometimes do expect an increase in rent. That’s the flip side of rising home values.”

Zillow crunched the numbers for the homes around other specialty grocers already in the area. In the Naples area, home values near Trader Joe’s jumped more than 12 percent and those near The Fresh Market jumped more than 24 percent in the third year after opening.

As for homes near the Whole Foods in North Naples, their values actually dropped in its first three years; however, the specialty grocery store opened at the start of the 2008 foreclosure crisis. As of November 2018, home values around that store are up more than almost 25 percent.