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A factor analysis of landlords’ and retail trade tenants’ different beliefs in lease negotiations

Author

Listed:
  • Lundgren, Berndt

    (Department of Real Estate and Construction Management, Royal Institute of Technology)

  • Hermansson, Cecilia

    (Department of Real Estate and Construction Management, Royal Institute of Technology)

  • Gyllenberg, Filip

    (Department of Real Estate and Construction Management, Royal Institute of Technology)

  • Koppfeldt, Johan

    (Department of Real Estate and Construction Management, Royal Institute of Technology)

Abstract

Previous research on factors that affect real estate rent levels have focused on the importance of, e.g., lease structure, the effect of location, size, and anchor or non-anchor tenants. To add to the knowledge of the research community, we investigate how retailers’ and real estate landlords’ views differ on factors they deem important in negotiating rent by investigating differences in their beliefs, and we also investigate the impact of education. We use a websurvey sent to Swedish landlords and retail tenants, and answered by 156 respondents (106 complete answers). With principal component analysis (PCA), the number of variables are reduced and the factors deemed important are established. Seven underlying dimensions in the rent negotiation process were labeled: Regional and industrial growth, Rent and vacancies, GDP growth, E-commerce, Customer focus, External information, and Trust. Landlords were found to put more weight on the importance of Regional and industrial growth, E-commerce, Customer focus and Trust than do tenants. We also find significant educational differences for the following factors: Rent and vacancies; E-commerce; and Customer focus.

Suggested Citation

  • Lundgren, Berndt & Hermansson, Cecilia & Gyllenberg, Filip & Koppfeldt, Johan, 2022. "A factor analysis of landlords’ and retail trade tenants’ different beliefs in lease negotiations," Working Paper Series 22/7, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    • Handle: RePEc:hhs:kthrec:2022_007
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    More about this item

    Keywords

    rent negotiation; principal component analysis; landlords; retail tenants; trust; education;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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