The opening of a Starbucks—and cafes more generally—is a leading indicator of gentrification, and is associated with an increase in local housing prices of 0.5 percent.

Gentrifying neighborhoods tend to spawn a growing number of grocery stores, cafes, restaurants, and bars. But there is a chicken-and-egg question of what ignites that development.

Although it’s possible some existing shops could be squeezed out by the influx, the overall trend is that the number of businesses in that area will expand.

Yelp measures of local business activity, such as prices and user ratings, provide a new way of studying the economy. This data can provide indicators that gentrification is occurring, forecast an increase in housing prices, and shed new light on the evolution of the local economy at the neighborhood level in close to real time.

0.5%

increase in housing prices

growing number of grocery stores

Gentrification can ruin neighborhoods by forcing out existing businesses that serve the needs of the locals.

Identifying
gentrification