New Study Finds Thriving Small Businesses Lift Real Estate Values

Posted Wednesday, Oct 19, 2011

A new study prepared for American Express OPEN by Civic Economics has found that in neighborhoods with thriving independent businesses home values outperformed citywide markets by 50 percent over the last 14 years. The American Express OPEN Independent Retail Index also notes that those same neighborhoods benefited from strong hiring at small, independently owned businesses.

The study, released on October 18, looked at 27 neighborhoods where small businesses have thrived in 15 major U.S. cities and found that home values in these neighborhoods outperformed their broader markets by four percent per year and 50 percent cumulatively over the past 14 years. Additionally, “indie hotspots” in those neighborhoods support an average of more than 1,800 jobs.

“This research validates what we know intuitively — that small businesses are the lifeblood of our communities,” said Susan Sobbott, president, American Express OPEN. “There is concrete evidence that thriving independent neighborhoods lead to higher real estate values and more local jobs.”

Although the study found that independently owned retailers and restaurants have lost some percentage of their market since 1990, it also identified several encouraging trends, among them:

  • Independent grocery stores have kept pace with overall industry performance and have seen a modest uptick in the last decade;
  • Local clothing stores have staged a healthy rebound in recent years;
  • Furniture stores and the sector that includes sporting goods, books, music, and hobby shops have maintained a high percentage of the market throughout the study timeframe; and,
  • Independent full-service restaurants have held onto their relative position and retain strong support among dining consumers, and local bars and taverns of all kinds remain strong.

This particular study looked at independently owned retail and eating and drinking establishments in 15 of the largest U.S. cities, but Sobbott said the results show “there is no single formula for success — any U.S. city can nurture a vibrant small business community.”

Learn more about the AmEx OPEN Independent Retail Index.

Faciliate Your Own Community Indie Impact Study

Through a recently announced partnership between ABA and Civic Economics, up to 10 communities with an active ABA member bookstore can work directly with Civic Economics to create a customized economic study of their communities at a reduced rate.

Communities with active ABA members may engage directly with Civic Economics for a customized local study for a fee of $2,400, a significant reduction in what these studies have cost in the past. And as further incentive and support, ABA will contribute 25 percent of that fee.

Interest in this limited offer is high, so interested stores, community groups, or IBAs should contact Dan Houston at Civic Economics as soon as possible to discuss participation. Further details about how the study will work, the responsibilities of the sponsoring organization, the payment terms, and more is available here. Results of previous Civic Economics studies are available here.
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