New Study Finds Thriving Small Businesses Lift Real Estate Values

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 [1] 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. [1]