What I don't see in these conversations is how much increasing property prices contribute to killing third places.
People get excited because they bought a house for $200k and it's notionally worth $800k now. In reality they haven't gained anything because every house is $800k and you still need somewhere to live so you still only own one housing unit of wealth.
Worse, people actively lobby for policies that increase housing prices.
But if this house is worth $600k more where is that money coming from? It's coming from the next generation who has to pay substantially more for the same house. It's a wealth transfer from the young to the old.
How does this relate to third places? Well, imagine a neighbourhood cafe. 20 years ago that cafe space might cost $200k and have a commercial rent yield of, say, 5% so it would cost $10k/year in rent for argument's sake. Well, all property has gone up in value so that cafe's space is now valued at $800k. It still demands a 5% yield so that's now $40k/year. All the cafe's customers have to pay for that with increased prices.
So with increases in housing costs, people have less money to spend and that money doesn't go as far. At a certain point, volume goes down and the business has to either close or raise prices, further exacerbating the problem.
Rising housing costs are strangling every aspect of society.
US zoning laws are probably a much bigger factor in keeping neighborhood cafes out of residential areas. The idea of a “corner cafe” - literally a house converted into a store front - simply isn’t possible in most residentially zoned areas.
> In reality they haven't gained anything because every house is $800k and you still need somewhere to live so you still only own one housing unit of wealth.
They can borrow money against the extra value of their house. They don't need to move out. That's what everybody in the landed gentry has been doing for the past two decades.
You can also sell that house and buy a very nice ranch (when you’re old, you won’t want stairs) somewhere that isn’t even a middle-of-nowhere shiathole for half the price. Pocket the rest.
That is why the gains really are actual, useful money for lots of people.
...and one day, a younger generation is going to say "enough" because they'll have no other choice. I'm not sure what they'll do, but it probably wont involve respecting the abstractions that we've been basing our retirement savings on.
Yeah, it's confusing to me anyone expects usury of youth to be sustainable. We come into the world with nothing, and then we are saddled with debt and costs like describe above (which are, essentially, debt)?
And yet, it's a system which has, so far, outlived the others. Perhaps it is stable, after all. It certainly keeps the youth honed in on the grindstone.
There were some defectors in the 60s, and in 2008, but that was far less sustainable or, rather, failed to reach critical mass / escape velocity.
I doubt it. Even if there's enough growth to make the plight of the young survivable from a wealth standpoint, this thing we've built has no steering wheel. If it's not the youth that will say enough, it'll be the atmosphere.
I call this “terminal capitalism.” We’re now in a state where everybody prioritises building their own wealth at everyone else’s and society’s detriment.
I’m not an advocate for communism either, by the way. Just regulation and proper taxation.
You might have replied to the wrong comment. You are talking about people wanting better paying jobs. I am talking about people wanting their house to be an investment.
Perhaps you are implying that even if the price of houses increases, if wages increase at the same rate, then they will cancel out? If so you are describing inflation, and the real cost of houses will be unchanged.
Alternatively, if you are implying that the solution is for everyone's wages to increase faster than the prices of houses increase, then the consequence of your solution is that houses will no longer be anywhere near as attractive of an investment.
Setting aside any moral considerations, it simply does not make any rational sense to wish for the price of a necessity to increase while also wishing for it to become more available. Imagine wishing for food to become more expensive while also lamenting that people can't afford food!
The ideal situation is that people that move to the area are able to make enough wages to pay for the appreciation in the house. I reject any premise that suggests it is not a possible scenario. I will admit that it is not possible given how our economy is doing, but that should change. However, if the economy was healthier that’s what it should look like, and that’s what people should be wanting from its government.
I think the problem is debt. The power of debt has outstripped any buying power of an individual worker.
Unfortunately, Starbucks is opening “kiosk only” locations with no seating that, obviously, fail to function as a third place. My partner finished up a medical appointment and was waiting for me to arrive, and decided to stop in Starbucks. Oops, just a kiosk. The options left for a “third place” was a petrol station that had seating and a grocery store.
Somehow I don’t think petrol station seating areas will promoting a huge amount of neighbourhood entrepreneurship. I would probably look at more independent, locally-owned kind of establishments—particularly that do have seating.
I can think of a lot of critical meetings that happened in these sort of coffee shops, including a first interview for the person who is now our staff software architect, the first meeting I had with my now-business partner where we went over her product idea (admittedly that was a Starbucks), getting together to hash out ideas to solve difficult problems, and best of all, a random chance encounter because we were in a third place. This is in places as diverse as small heartland American towns, NYC, Tel Aviv, or Pennsylvania’s rust belt.
Fewer of these places means fewer of these good things happening. I don’t need a kiosk; I have an espresso machine I can operate at home or in the office.
> I don’t need a kiosk; I have an espresso machine I can operate at home or in the office.
You would probably enjoy the experience of a small, locally owned coffee shop then. Starbucks is optimizing for their profit. In my suburban city, Starbucks has closed most or all locations that were a few miles from the freeway. They built new locations with drive throughs and very little to no seating within a few blocks of every freeway onramp. This tells you what they are optimizing for.
Unfortunately, chances are encounters and warm fuzzies do not please the corporate overlords.
In LA, every small locally owned coffee shop has become totally overrun with folks buying one latte and proceeding to take a whole table to themselves and their laptops for the next 5 hours.
>every small locally owned coffee shop has become totally overrun with folks buying one latte and proceeding to take a whole table to themselves and their laptops for the next 5 hours.
That's what a third place is and what people are lamenting the lack of now.
No, that’s what a second place is. A third place is for socialization, a second place is for work. Just because you’re relying on some independent small business owner to pay rent for your desk while you prevent other customers from patronizing the establishment and don’t talk to anyone, doesn’t make it a third place.
Agreed, but with a caveat: It goes back into "third place" territory if they're engrossed in a laptop-hobby rather than laptop-employment, even though many of the external favors are identical.
The FCC only has jurisdiction over active transmissions. They have no power to say that I can't build my hotel out of reinforced concrete that acts as an effective faraday cage.
Actively. You can however consider it when choosing a location (although obviously, the mobile network providers can make changes outside your control which might change your 'USP').
When were corporations for public benefit? Even medieval corporations were for the benefit of the participants, and only tangentially the public at large.
What kind of legal protections do you think should go?
BTW, say, your bedroom serves no public benefit; its point is to provide you some highly private benefits. Is it bad?
I'd say that any activity is fine, as long as it does not result in or intended for public harm. Providing a public benefit should be strictly optional; paying taxes should be enough.
Pretty sure you can commit crimes in your bedroom, and pretty sure a crime is easier to get away with when you have a private space to do it/hide stuff in.
In exchange for taxing them twice. First with Corporation Tax, and then on salaries/dividends/capital gains/however the shareholders extract income from the corporation.
Every business is optimised for profit. This is why they exist. Difference is that Starbucks probably can be profitable operating as a kiosk but a mom and pop store can't because it lacks brand value.
Not necessarily. For now, every business is run by a human being, not AI, so all of the small mom and pop businesses optimize for the whims of the businesses owner. Got that one vendor with the sales person that they like more than the other vendor's because they were rude? Guess who's winning the contract with no oversight? Mom or pop tired today? They're not optimizing for profit, they're taking a nap. Mom feel bad for the customer who's pregnant and who's partner left them? She's not optimizing for profit when she undercharges them on lunch and dinner and breakfast.
Businesses everyone recognizes by name aren't run that way because the layers of capitalism serve to isolate people from the human aspect of their decisions, but there are a lot of businesses that people have never heard of.
Over optimized corps are usually going down sooner or later. Look at Bell or at the living corpses of IBM, Oracle and Boeing. The problem is they are getting propped up by governments around the globe and their fear of impeding doom if their old supplier shits the bed.
Everyone may be wanting cozy shops, large apartments, free ice cream, and a pony.
Cozy shops bring in much less profit per $ invested. They cannot seriously compete with kiosks, when the majority of customers just want some competently brewed joe on the way to work (or even half-competently, since we mention Starbucks). Maybe a bagel with it. Next customer!
A cozy shop with seating for customers who want to sit there and talk for an hour over a $3 cup of coffee each, cannot compete. It can maybe run as a lifestyle business by somebody who loves the craft and does not need much money. But not as an efficient business chain.
If commercial real estate is cheap enough, an efficient business chain absolutely can do well with a cozy shop. A lot of people don't want a kiosk, and will simply skip it, but will go to a place if it's a cozy shop. Maybe this isn't so popular in modern America these days, but it is in many other places. Here in Tokyo where land prices are huge, all the Starbucks I've seen are still cozy shops, though they do tend to get rather crowded. I don't think a kiosk would work here at all; you can't bring coffee drinks on the train and eating on the sidewalk is rude. But Starbucks is immensely popular and always has a line (along with competing shops like Tully's).
So either Americans just don't care much about cozy shops any more, or American commercial real estate rent is too expensive, or some combination of the two are making it unprofitable to have a cozy coffee shop in American cities these days.
> So either Americans just don't care much about cozy shops any more, or American commercial real estate rent is too expensive, or some combination of the two are making it unprofitable to have a cozy coffee shop in American cities these days.
It might also be more profitable to operate a location as a kiosk than as a larger cozy shop.
If you re-read my prior comment, my point is that it doesn't have to be this way, and isn't like this in other places. Cozy (but frequently crowded) Starbucks with sit-down seating are extremely common and popular here in Japan. They aren't turning them into kiosks. And this is the very same company that's doing so in America. So I think we should look at other factors instead of just whining about "evil capitalism".
That word also gets used, somewhat interchangeably (an anticafe will often also mention the word "coworking" in its description, but never the other way around).
Coworking places tend to be more like offices with some startups renting permanent spaces and some people dropping in for a day of work. They tend to have real desks and phone booths. Anticafes tend to be more like community spaces with cafe seating, board games galore, and maybe some cats. Both are filled with people on their laptops :)
Cats! It's a stroke of genius in changing the atmosphere.
A small coworking space closest to me is pretty informal, has tables, not desks, but you should bring your own coffee. If they had a cat, it would definitely be an extra attraction.
At this point, I feel like that kind of thing is an obvious consequence of, among other issues, most of the US going straight to "we've tried nothing and we're all out of ideas" when it comes to mental health issues and the homeless.
> Unfortunately, Starbucks is opening “kiosk only” locations with no seating that, obviously, fail to function as a third place.
And when they convert an existing location to kiosk only, the prices do not go down.
There are two Starbucks locations in downtown Redwood City, about 250m apart. The one on the right side of the tracks has comfortable seating and tables. The one on the wrong side of the tracks, in the dying mall near the homeless camp, is kiosk only. Same prices.
It may be that they converted the location to kiosk to avoid raising the prices, given that California recently raised their operating costs by a significant amount. So the prices did go down in a sense.
I've been protesting the loss of starbucks seating in my grocery store by just making some seating out of whatever product is on display at that time. I haven't run into any entrepreneurs yet, but the community is amused.
I've noticed students working in the IKEA Cafes here in Australia!
They offer similar benefits to a good sized Starbucks store.
Free charging points, WiFi, bench seating in secluded corners and so on.
Though I'd wager that WiFi is less important, as people have mobile plans with plenty of data.
Given the accommodation crises in Australia, I'd suspect many students dont have a decent place to study in their homes. Many of them are sharing bedrooms etc..
IKEA restaurants are my secret (guess the cat is out the bag now haha). I never see anyone else working there. Free unlimited parking too. And Fridays has half price food
Only downside is screaming kids
And yes there's bad mobile signal but Vodafone (famous for having better indoor signal I believe) works ok
IKEA regularly shuffles around it's layout. They won't let you learn shortcuts and exploit experience.
I learnt this the hard way several times in my local IKEA, but I also read an article about how this is absolutely strategic in their thinking. Unfortunately I couldn't find it to back me up.
This is true. A lot of shortcut doors are very non descript too and they look like doors into some back room or warehouse you’re not supposed to enter. They do mark them on the store maps though. “You don’t have to be rich, just smart” indeed.
The study basically compared neighborhoods that received a Starbucks versus neighborhoods that did not. What if Starbucks decided to open in those neighborhoods because of some confounding factor that suggested an increase in economic activity?
Except how do we know that the reason they didn’t do so was precisely because of that confounding factor? It’s a neat idea but leaves one wanting for better data
IIRC (I read this study a few weeks ago), they compared areas where a Starbucks opened; areas where Starbucks planned an expansion but were prevented by things like city planning snafus; and areas where Starbucks opened in non-traditional (eg low income) areas through their partnership with Magic Johnson.
I'm from a city in central China, where Starbucks is a great place to talk because it's located around a mall, and unlike other stores, the seating is less crowded, but if I want to study or get quiet to do something, I'll choose the library or a less lively local café.
I am currently living in Japan after living my whole life in the United States. I have noticed Japanese Starbucks are much more generous with the space and seating, and generally are wonderful places to socialize/study/work. Additionally, I wonder if it is related to the prevalence of malls and their popularity. In the US, malls are almost universally graveyards, whereas in Japan every Aeon Mall I've ever visited has been full even on weekdays.
There’s a nice coffee shop near me but they have somewhat hostile policies toward people wanting to sit on their laptops and work for hours, which makes it hard to be a decent third place. On weekends, laptops are banned entirely.
People sitting on their laptops, usually with headphones, are actually themselves hostile to third places and that's why some cafes ban them on weekends.
The issue is that its a starbucks. I think if people are trying to hang out with their friends, at this point in 2024 they are not going to waste that moment of everyone's schedules aligning like the planets at merely starbucks. I hope at least. Not to mention the menu is basically optimized not to have you stay and hang out, its prepackaged or microwaved stuff, unlike most other local cafes where they will serve you hot food on ceramic dishware.
Where I grew up it was either Starbucks or McDonalds. We didn’t otherwise have a lot of options as young people. The only other third places were bars.
Friends is very idealistic in a lot of ways. The closest thing to that experience in real life is a dirt cheap college bar, at least in the day I'm not sure if they are still like this. Everyone has nothing to do after doing the minimum of their responsibilities for the day so we'd just show up at the bar as soon as we could, and others would know to end up there soon as they could whether that be at noon with a backpack still on or around midnight. It was cheap enough where you could basically sit there and drink all day for maybe $20. That probably gets you a drink and a half today if that, and what do you know, no one's hanging out all day at these places because that could cost you $100 instead of $20.
In Howard Shultz book about Starbucks he said one of Starbucks goals was for it to be a third place to be able to safely go to chat and socialize. Home is one, work is two. He wanted Starbucks to be able to be a/the third. Similar to what a church or pub has provided throughout history but a lot of people no longer go to church.
Tidbit about continental Europe: I think here this role is rather served by restaurants since people tend to have 1-1.5h proper lunches which get used a lot as networking opportunities to meet with interesting parties. Most of my LinkedIn messages are to set up lunch plans.
Maybe at some point it was, but we are well past sbux owning the term. You can see for yourself, do a google search for "third place -starbucks" and filter down to results in the last 24 hours. You will still find news articles, reddit threads, etc, using the very same definition we are using here.
I've seen articles in strong town use it, I've heard the term come up in meetings of my local pro-development citizen's organization, etc. Starbucks has no claim to the term third place, especially given that since covid, the majority of them don't even qualify as third places.
The third place is from 1989 book, The Great Good Place. Starbucks looks to have adopted it a while ago, at least 2008. But I have only heard it used by urbanists.
That was my first thought, too, but that's not totally ignored. It all hinges on this part: "...when compared to census tracts that were scheduled to receive a Starbucks but did not do so..."
So the sampled population is the neighborhoods that were scheduled to receive a Starbucks, and lack prior other coffeeshops. Which means we're basically only looking a newly gentrifying neighborhoods (that Starbucks has calculated are worth opening something in, but that's probably mostly redundant with "newly gentrifying"). This severely limits the scope of applicability, but is fine in terms of the statistics.
The big question is: why did some locations not receive the Starbucks they were "scheduled" to receive? Because that is a potentially huge confounding factor. If it's because Starbucks corporate said "hey, we only want to open up 2000 new locations this year, let's roll dice to see which ones get it", then it's all good. If (as seems more likely) it's more like "let's start the process for all candidates, but drop the ones that are slowest to get through the permitting process or hardest to get a loan/insurance/workers/supplies/building materials for", well then -- might those affect the ability to start up a company just a wee little bit?
I'm torn. It's an interesting enough result that I'd almost like to go to the extreme measure of doing the "actually read the paper" thing that I've heard rumored some people do. And yet, my cynicism says my doubts are probably correct, so I don't want to bother with the effort to find out if they aren't.
To me, the "compared to census tracts that were scheduled to receive a Starbucks but did not do so..." is a weak défense against the correlation argument.
Like you said, without knowing the why of the change in plans, there is no way to judge causality confidently.
Anecdotally, I love these types of cafes (not "Starbucks" but this model), hope we get more, and see huge benefit both for myself and the community.
Is Starbucks good at predicting gentrification? Presumably there is some criteria someone is using to gauge the feasibility of a location vs others. If you can beat the rush, you can probably get better leasing terms etc.
Look at demographic data & data that correlates with it. The Census and related organizations offer very fine-grained data (both in characteristics/factors & in level of specificity of location).
In the past, I had built a data brokerage offering clean and centralized data in this area -- the equivalent of Netflix for data catalogs (back when you could say this with a straight face). It is not a hard problem. You can (and many did) throw entire datasets at a random forest as a first-pass, and then retrain with only the features that pass a significance threshold.
Algorithmic identification of real estate investment opportunities for the purpose of corporate expansion is not a new thing. Most serious shops do it. The techniques are simple, but it's the prep and decision-making after that are difficult.
Depends on if you are a part of the crime rates that go down or not.
More seriously: lower crime, more services, reduced infastructural and service strain, higher income, and an area made more desirable.
The very hard part would be getting only the good, to bring in investment and raise incomes of individuals across all individuals at a neighborhood level instead of just importing richer people. The levels of sudden life changes required frankly suggest mind control being involved.
"Importing richer people" is just one part of it, you're also freeing up housing elsewhere which allows greater upward mobility there. Their income also brings more opportunity with them.
I thought the article would be from past years rather than June 2024. Nowadays, we're looking for a Second Place having chosen to lose the workplace and working from home. But I do get that 'Third Place' was the terminology.
This is an aside, but my how far has Starbucks fallen at the hands of profit optimization. A Starbucks used to be a great place to spend time. Today the interior of almost every Starbucks is cold, beat up, and (intentionally?) uncomfortable. (In the stores where they even still have seating, which another commenter pointed out.) The quality of the product is barely a step above a gas station.
On the other hand, my area has a few excellent locally owned options that are so important to me. When I think about Starbucks vs. one of those locally owned shops, it reminds me just how much a rich tapestry of small businesses in a neighborhood can transform it for the better. Starbucks had that going for a it for a short while.
It depends on the location and competition from other local businesses.
The Starbucks where my parents live is nice to sit down and have a conversation with someone - it's bigger and has more space. Why? It's a small town and there isn't much competition from other local coffee shops.
Compare that with the Starbucks's of Manhattan - usually very cramped, little seating, and meant to be more of a "to go" place than a place to sit down.
For some of the locations that have been takeoutified, they used to have chairs and tables but these were purposely removed. The room is awkwardly empty so they stuff it with random chochkys like insulated mugs to fill the void.
I think there’s some truth to the notion that they’ve done this in markets and stores where they are more likely to have a problem with homelessness and non-paying customers. I’ve seen first hand how much time and energy some Starbucks employees have to put in to waking people up who are sleeping in the store, cleaning themselves in the bathrooms, or trying to bring in a cart full of their belongings. Goes without saying (in my opinion) that it’s sad and a failing of society, but it also has to be a real problem for Starbucks.
Most businesses just take care of that with a security guard. I'd think an $84 billion company can afford a $25/hr guard at some of these locations. McDonalds has figured out how to deal with the issue without ripping out their interiors.
They are connected.
More shops (including coffee shops) compete for the relatively well-off public walking around Manhattan, so they compete by agreeing to a higher rent, too. If you can't afford $50 / sq.ft., a few other bidders may.
What seems weird is that with the massive number of Starbucks closures I've seen smaller indies and local chains open up in the exact same locations and somehow make a go of it- how does that work?
Naively, a small shop only needs to pay on-the-ground workers and direct owners who may be a subset of the first group. Starbucks has to pay the regional managers and their bosses and the shareholders, etc. Also, at the mom-and-pop, no one is screaming “Why is the fourth derivative of profit increase not higher??”
I think that is, indeed, rather naive. Starbucks has an extremely efficient supply chain which ensures its raw ingredient costs are lower than what the small shop can negotiate, even moreso when delivery to the store is factored in. After raw wages, it can also offer health insurance and benefits to its employees at significantly lower per-employee costs than the small shop. It can often get a better deal on real estate, because landlords know that Starbucks adds prestige and enables them to raise rents on surrounding units. And of course, while mom & pop have to spend money advertising to the neighborhood with flyers, direct mail, coupons, etc, the Starbucks just posts that green mermaid logo and lots of people flock to it (and often are willing to pay more for the product).
It's not naive; both posts have correct points. It's the classic little-company vs. big-company scenario. Little companies can move faster and adapt quicker, they don't have the same profit expectations or overhead costs as big companies (upper manager and CxO salaries), however the big company has big advantages with economies of scale, name recognition, and access to capital. Some things for the big company may work against it: some people may go out of their way to avoid Starbucks (or other big name-brands) due to some bad experience ("it tastes burnt!") or association or simply disliking bigger companies, for instance.
Your post - which at least attempts to list some of the advantages of a small shop AND some of the advantages of a mega-chain - demonstrates why kevinventullo's post is, in fact, naive - because he only mentions the disadvantages that Starbucks might have, without considering any obvious advantages it has, like scale and brand recognition.
If you want to be pedantic about it, the post I was responding to was asking how a mom-and-pop might survive when Starbucks didn’t. Thus, I only felt compelled to name some possible advantages on the one side. It was not intended as an overall analysis. Obviously Starbucks has some other advantages over a mom-and-pop, or else they wouldn’t be everywhere.
Different types of business owners want different kinds of return on their investment.
Small business entrepreneurs might be perfectly happy just turning a profit a few years into the venture. In contrast, a stock trader only turns a profit when the business gets more valuable, which requires growth. The business has to make more profit than it did last year. A third place might turn a profit but not provide growth for investors, so they're not going to fund it, they're going to destroy it.
This gets even crazier with private equity, because the fund managers are incentivized[0] to spike growth as quickly as possible. If you ever notice a business rapidly deteriorating, it's because private equity is sucking the blood out of the company. Run.
[0] The split between fund investors and fund management changes once the fund meets its hurdle: an arbitrarily-set amount of profit. After the hurdle is met fund management gets every penny.
Starbucks reacted to the covid-19 lockdowns by closing many of their non-drive through locations, regardless of their potential profitability when no longer in a lockdown.
It seems like everyone's experience is highly localised. Even within 3km of my place I have 4 starbucks. 1 is amazing, 2 are not great, and 1 is the takeaway variant. Which one is the true measure of "Starbucks"? It's the same for local cafes too.
Also what's with the "they just want to make a profit" argument going round here? Why wouldn't they? They literally have a legal duty to do so. Should we instead incentivise cafes to not make a profit?
I think the “just” is the key word here. No one is going to get up in arms over modest profits. It’s the chasing growth at all costs even when it means sacrificing what should be the core value(s) of the business.
A lot of franchises just end up as soulless real-estate/marketing plays that siphon money out of local economies and compete on axis other than actual value/quality.
The Reserve stores are absolutely fantastic (and twice the price.) The Seattle location was the first one I had ever been to. Sadly it seemed to me like they stopped growing the concept... the one in Palm Springs is really just an ordinary Starbucks despite being branded as a Reserve, and they pulled the plug on an intended opening in Boston a few years back.
do they? when i want to work, ill go to the big one. if im late for work and feel like coffee, the takeaway one is quicker and less chaotic without the tourists/campers/families
im not usually one to defend a company, and i dont know what's best for starbucks the company and brand. but what i see isn't necessarily or obviously bad
I don't have a problem with profit motive at all, but I think it's completely valid to point out situations where it's taken to an extreme that destroys the brand or puts it in a vulnerable position, which is arguably being done to Starbucks in my opinion.
Some of the starbucks clientele have some interesting behaviors. There is a drive thru/walkup location where the drive through line pours out into the street as people park, walk up, get their order (perhaps a mobile order), leave, drive away, while the drive thru people scarcely moved forward in line. The drivers just sit there in line with their phone 1 foot from the face and inch forward on periphery vision alone. The entire ritual must be deeply habituated at this point, tick tok coupled with a stimulant. They probably have no idea how much time has actually passed.
People get excited because they bought a house for $200k and it's notionally worth $800k now. In reality they haven't gained anything because every house is $800k and you still need somewhere to live so you still only own one housing unit of wealth.
Worse, people actively lobby for policies that increase housing prices.
But if this house is worth $600k more where is that money coming from? It's coming from the next generation who has to pay substantially more for the same house. It's a wealth transfer from the young to the old.
How does this relate to third places? Well, imagine a neighbourhood cafe. 20 years ago that cafe space might cost $200k and have a commercial rent yield of, say, 5% so it would cost $10k/year in rent for argument's sake. Well, all property has gone up in value so that cafe's space is now valued at $800k. It still demands a 5% yield so that's now $40k/year. All the cafe's customers have to pay for that with increased prices.
So with increases in housing costs, people have less money to spend and that money doesn't go as far. At a certain point, volume goes down and the business has to either close or raise prices, further exacerbating the problem.
Rising housing costs are strangling every aspect of society.