Thriving Small Businesses Boost Real Estate Values, Research Shows

This is the conclusion of The American Express OPEN Independent Retail Index which revealed that communities with strong independently-owned businesses saw their home values outperform the citywide market by 50 percent in the past 14 years.

The study specifically focused on 27 areas where small-scale firms have prospered within 15 large U.S. cities, concluding that home values were higher than their larger markets by 4 percent annually.

The study also shows that areas benefited from high hiring in small independent businesses.

The most populated areas of the neighborhood were those that had an average of over 1,800 employees at independent stores as well as bars, restaurants and other establishments.

“This research confirms what we already know that small enterprises are vital to the communities we live in,” Susan Sobbott, the president of American Express OPEN, said in a statement she prepared. “There is evidence to show that strong independent neighborhoods result in greater property values and more local employment.”

It also analyzed the Independent Retail Index also charted and evaluated the performance of privately owned food and drink establishments within 15 of biggest U.S. cities over the recent two decades. New York, San Francisco, Washington, D.C., Boston, Philadelphia and Miami all scored substantially over the national average in regard to the strength of their small business sectors in both the dining and drinking industries. On the other hand, Phoenix, Dallas, Minneapolis, San Diego and Detroit were significantly below the national average.

“Our research shows there’s no formula for success that is universally accepted,” Sobbott said. “Any U.S. city can create an active small-scale business group.”

The study also found that independent-owned retailers as well as restaurant chains have seen a decline in their market share in the last 20 years.

Restaurants and bars that are independent accounted for 64 percent of the total revenues in 2009. This was a decrease of 7 percentage points in the last 20 years. Furthermore, small retail stores accounted for less than half the total wholesale sales for 2009, which is a important decrease.

The report highlighted some positive trends. The data also showed that the local stores for clothing have seen an impressive growth in recent years. Likewise, furniture stores, as well as the entire sector comprising books, sporting items music, and hobby stores is still a significant portion of the market during the study’s duration.

In addition, independent grocery stores have been able to keep up with the overall performance of the industry and have experienced a slight increase in sales over the past decade.

The study, intended to highlight the advantages to communities that are supportive of local independent stores is based on data of more than one million restaurants, retail stores and bars that had been open for at least one year.