Toronto's real estate market has been on an 11-year tear, and continues to set new records every month. The boom has dramatically transformed the city's skyline and neighbourhoods, and changed the way many of us live. Today, Garry Marr on what makes a neighbourhood hot.

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If you own a house in one of Toronto's "in'' neighbourhoods, the last thing you want to see is Bruce Elliot packing up one of his company's stores.

Mr. Elliot, the president of The Second Cup Ltd., says it happens rarely, but it will "if the retail mix or the neighbourhood has changed. It's not good [for the neighbourhood] if we leave."

Chi-chi coffee operators need a critical mix of high density and high incomes; retail specialists say Second Cup and Starbucks want to see household income of at least $90,000. "If you are a premium brand, you are looking for high household income, that is a key driver," Mr. Elliot said.

This relationship, however, goes two ways: Buyers want to be where the premium brands are. A neighbourhood's retailers have become so important that some agents have taken to putting the names of the local businesses in their real estate listings, said Michael Polzler, executive vice-president of Re/ Max Ontario-Atlantic Canada.

"People love the idea of popping into a Pusateri's in the area and buying some super-expensive freshly squeezed orange juice. They want something they can walk to or have a short drive to," he said. "[The local stores] play a significant role in where people want to live."

Toronto areas have become branded, and part of the brand is defined by the shops, he said: "People will ask where do you live: The Beach, Bloor West Village, The Kingsway? The name of your area is synonymous with the car you drive and the stores in your area."

Kimberley Kofman, a communications specialist, said she was more than a little excited there was a Starbucks down the street from the house she bought in the Yonge and Lawrence area, although it was not the deciding factor.

"The shops are an added bonus. We've got everything where we live; there's a butcher shop, a small grocery store. You can walk to pick up anything. We have only one car, so it's important to be able to walk to everything," Ms. Kofman said. "We like that there's a mix of different restaurants in the area."

Rick Pennycooke's Lakeshore Group is one of the firms companies such as Second Cup hire to scout out what the next big area will be. He said the chains will make a call on what the next great neighbourhood will be, but for the most part real estate prices have already begun to rise by the time the Second Cups and Starbucks come through.

"They'll look at an area and ask whether there is potential for growth. The way to do that is to consider [zoning] applications in the area. Those take two or three years to go through the system, so you can see what is coming down the pipe," he said. Starbucks, said Mr. Pennycooke, wants ''a young professional from about 22 to 45 years old. That's their core audience."

While Starbucks, Second Cup and Timothy's covet the high-end consumer, a Tim Horton's in your neighbourhood is no sign to panic.

"They don't just service lower-income people. There are some people who are just rabidly Tim's, regardless of income class," Mr. Pennycooke said.

Mr. Elliot said his chain is discerning on placement of a $350,000 franchise. While he loves his 360 Second Cup stores, he is not so sure they add value to property in the area. If anything, he thinks the presence of the high-end chain comes a bit after the fact.

And it does not have to be chains. Sometimes unbranded trendy stores in a neighbourhood will drive housing sales. "It's the cheese boutique," Mr. Polzler said. You don't want to see rundown diners in your neighbourhood, he added.

Take a drive along the Danforth/ Bloor corridor and you can witness the ebb and flow of retail and how it matches the accompanying housing. "Go further east and it ain't so great, but then you get to Greektown, then Yorkville, then it's Bathurst and then it falls off a little. It's OK but not so great. Then you hit Bloor West Village and you're at a trendy area," said Mr. Polzler, adding that's where the housing prices climb again.

It has almost become a game for areas to try to reinvent themselves as the place to be to attract homeowners and retail chains.

"The Junction was lost in times for years [but] not anymore," Mr. Polzler said. "The Junction was able to do it because people wanted to live in Bloor West but couldn't afford to. They realized they could get the same house a little bit further north. Then the retailers get together and they'll brand the area with signs. The Junction has that, there are signs everywhere."

Then there's what are called "tag-along neighbourhoods" such as the North Beach or the North Annex. "It means so much to define your neighbourhood," and that means something to retailers, Mr. Polzler said.

"People who live in the city are buying a lifestyle and purchasing that lifestyle means they are purchasing everything that is around them. It's a badge of honour to walk around with your expensive coffee."

That's why it's just a bit disconcerting to see a low-end coffee shop come into your neighbourhood or, worst yet, a cheque-cashing chain.

"Those [stores] brand a neighbourhood, too. I can tell you something about Rosedale. The only cheque-cashing service you'll see in Rosedale is the Royal Bank of Canada."

gmarr@nationalpost.com

THE NEXT HOT AREAS:

Six next hot areas coveted by retailers, as chosen by Lakeshore Group:

1. The motel strip area of South Etobicoke along Lakeshore between the Humber River and Fleeceline Road.

2. Queen Street West between Shaw and Dufferin (near the Drake Hotel and the CAMH redevelopment area).

3. The Town of Milton on the east side along Derry Road between Thompson and James Snow Parkway.

4. Sheppard Avenue between Bayview and Leslie (around the area of the former Canadian Tire site that is being redeveloped).  {this is the location of Concord Park Place - See more)

5. King Street West between Shaw and Dufferin. Starbucks just went in last month at the DNA condo building. The area will likely see another Starbucks or Second Cup-type retailer in the next year.

6. The Town of Bracebridge in Muskoka.