Real Estate Booms When Small Businesses Prosper

Research shows that small businesses can increase local real estate values the more successful they are.

Thursday, October 7th 2021 in Economy by Richard Bertch
Real Estate Booms When Small Businesses Prosper

Consumers should consider shopping locally because new research shows that small businesses can help boost some areas' ailing real estate markets.

This is the American Express OPEN Independent Retail Index's finding. It found that neighborhoods with successful independent businesses had home values that were 50 percent higher than citywide markets over the past 14 years.

The report examined 27 communities where small businesses thrived in 15 U.S. cities. It concluded that home values in these neighborhoods outperformed those in larger markets by 4 percent each year.

This study also showed that strong hiring at small, independent businesses was a benefit to these neighborhoods.

On average, more than 1,800 jobs were available at independent restaurants, bars and retailers in the most popular neighborhoods.

Susan Sobbott (president of American Express OPEN), stated in a prepared statement that "this research validates what it intuitively knows - small businesses are vital to our communities." There is evidence to support the idea that strong neighborhoods can lead to greater real estate values and better local jobs.

The Independent Retail Index also surveyed and ranked 15 of the most populous U.S. cities and charted their performance over the past two decades. New York, San Francisco, Washington, D.C., Boston, Philadelphia, Miami, and Washington, D.C. all scored significantly higher than the national average for the vitality and health of their small businesses in the retail and eating and drink sectors. However, Phoenix, San Diego, San Diego, and Minneapolis were all significantly below the national average.

Sobbott stated that there was no one formula to success. "Any U.S. City can foster a vibrant small-business community."

In addition, the study showed that independent retailers and restaurants have seen a decline in their market share over the past 20 years.

In 2009, 64 percent of total sales were made by independent bars and restaurants. This is a 7 percentage point decrease over the previous 20 years. Another notable decline was in the share of small retail outlets that accounted for less than half of total retail sales in 2009.

The report highlighted some positive trends. Data showed that local clothing stores have experienced a rebound in recent years and that furniture stores, as well as the sector which includes books, music, and hobbies shops, has maintained a high market share throughout the study.

Independent grocery stores have also performed well in comparison to the overall industry and have experienced a slight uptick over the past decade.

This research was done to demonstrate the benefits of supporting local independent shops. It used information from over one million retail stores, restaurants, and bars that had been open for at most one year.

About the Author

Richard Bertch

Richard is a contributing finance author at ChamberofCommerce.com and freelance writer about all things business, finance and productivity. With over 10 years of copywriting experience, Richard has worked with brands ranging from Quickbooks to Oracle creating insightful whitepapers, conversion focused product pages and thought leadership blog posts. 

Full Biography