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Can Whole Foods Boost Home Prices?

Economists say Whole Foods does for real estate what it does for arugula — convince people to pay higher prices.

The organic supermarket’s planned move into inner city Detroit – one of America’s most depressed urban areas – may be a giant leap of faith for one organic supermarket, The Wall Street Journal reports. But real estate experts expect the chain’s arrival to have a positive influence on house prices in the area. Studies have shown that valued local amenities are attractive to house hunters and add to the belief that an area is up-and-coming. “It’s a chicken-and-egg issue,” says Stuart A. Gabriel, director of UCLA’s Richard S. Ziman Center for Real Estate. Whole Foods spokeswoman Kate Klotz downplays the market’s power.”We move into areas that are already moving in a positive direction,” she says. “It’s doubtful that people move into a new place just for Whole Foods Market.”

Homebuyers choose neighborhoods because of the low crime rate and good public schools – but an equally big factor is the presence of a brand like Whole Foods, real estate analysts say. Gabriel says an upscale supermarket like Whole Foods is part of a “desirable basket of amenities” that homebuyers take into account. “This can be reflected in the bidding of prices of houses in those areas,” he says. The store may be a welcoming marker to younger professionals, he says.

And economists say once one big chain like Whole Foods moves in, other businesses and commercial offices may follow. The arrival of a specialty retailer implies “substantial” socio-economic research and due-diligence by the company, says Patrick O’Keefe, director of economic research at J.H. Cohn consultants in Roseland, N.J. “It would bolster confidence in a community, add to its attractiveness and… boost prices at least a bit.”

But once Whole Foods sets up shop, other say it may be too late to get a jump on the property market. At worst, says O’Keefe, “it’s probably like chicken soup, the cure-for-all-ills: it can’t hurt.”

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