Is Whole Foods Bumping Up Your Rent?

We've all heard the Whole Foods, whole paycheck joke. But the high priced chain of organic food stores is increasing more than just your grocery bills, it could be raising your rent. Whole Foods has become a landmark of gentrification- the selection of artisanal cheese and locally sourced pears ushering wealthy professionals into the neighborhood. While this belief is widespread, most analysis seems to be anecdotal. We take a look at the data:

Whole Foods Gentrification Detroit Minneapolis neighborhoods

Whole Foods Transforms Detroit

The first Whole Foods store in Detroit opened in June of 2013. In January of 2013, six months before the store opened its doors, the average rent in the Midtown neighborhood was $535 per month. This was more than $200 cheaper than the average rent for Detroit as a whole, which was $747 at the time.

One year later, in January of 2014, six months after the grand opening, housing costs in Midtown had increased modestly, with an apartment in the neighborhood going for $569 per month on average. This 6.3% increase was in line with rental increases happening citywide. The average rent in Detroit as a whole had risen to $823 per month, 10.1% more expensive than it had been the previous year.

However, housing prices in the area around Whole Foods rapidly spiked upwards. In June of 2014, one year after the grand opening, the average rent in the area surrounding the store had jumped to $917 per month, a 71% increase over the course of 18 months. At the same time, rents in Detroit were actually decreasing, with the average rent across the city clocking in at $802 per month. Clearly, rental increases in Midtown were quickly outpacing the rest of the city. The neighborhood, which had formerly been one of the cheaper areas of the city, was suddenly more expensive than the majority of Detroit.

Detroit

Rents in the neighborhood have continued to climb. Today, the average apartment in Midtown Detroit costs $1720. This exorbitant figure is even crazier when taken in the greater context of the Detroit housing market. The average rental price for an apartment in Detroit is $1152, almost $600 less than the average rent for a place in Midtown. In fact, Midtown Detroit is the third most expensive neighborhood in the city, trailing behind only West Side Industrial and Downtown Detroit.

A Slow Burn in Minneapolis

Minneapolis's Whole Foods narrative is a little bit different. This midwestern city celebrated the grand opening of the organic grocery chain in September of 2013. The store was built in downtown Minneapolis, an area that was formerly a food desert. The grocery store built at the base of a 236-unit luxury apartment building.

Six months before this Whole Foods opened, in March of 2013, the average rent for an apartment in downtown Minneapolis was $1640 per month. This was more expensive than the average rent in Minneapolis as a whole, which was $1269.

In March of 2014, six months after Whole Foods opened its doors, average rent in the surrounding area had increased to $1746 per month, a bump of 6.4%. In the same time period, the average rent across Minneapolis had increased to $1358 per month, which was a 7% increase in the past year.

Minneapolis

However, unlike the Midtown Detroit Whole Foods, rental prices surrounding the Minneapolis branch continued to grow gradually, at a similar pace of the city-wide housing market. As of October of 2017, the rent for an apartment in the area surrounding Whole Foods is $1904 per month on average. This neighborhood continues to be more expensive than Minneapolis as a whole, where an apartment rents for $1673 on average.

A Tale of Two Cities

As in Detroit, the impact of Minneapolis's Whole Foods on nearby housing was seemingly negligible in the first six months. The grocery store's effect on the housing market did not happen overnight, but over the course of several years both cities saw rents rise in neighborhoods featuring Whole Foods. However, rents in the neighborhood surrounding Detroit's Whole Foods store increased at a rate that quickly outpaced citywide rental trends, while rents in the area surrounding Minneapolis's branch increased at a rate more in line with the broader housing market.

The difference could perhaps be attributed to pre-existing neighborhood conditions. In Minneapolis, Whole Foods moved into an already affluent area of the city. But in Detroit the luxury grocery store opened in a lower income area, which was then gentrified until it became one of the most desirable neighborhoods in the city.

Causation and Correlation

While new Whole Foods locations definitely correlate with rising rents, parsing cause and effect is a bit more difficult. Did Whole Foods transform a neighborhood? Or did it simply capitalize on an already changing community? Probably a little bit of both. Whole Foods is a strong presence that attracts other high-end businesses, combining to increase the desirability of a neighborhood and consequently pushing up housing costs. These rent hikes don't happen overnight, but rents can increase dramatically over the course of several years.

Whether Whole Foods is a cause or a symptom of gentrification, one thing is for sure, if Whole Foods moves into your neighborhood you are probably going to see your rent go up. But hey, until then, you can stock up on all the seltzer water you could possibly want. Do you want to live within walking distance to Whole Foods? Search our rental listings to find your perfect place.

 

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