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The Management of Positive Inter-Store Externalities in Shopping Centres: Some Empirical Evidence

Author

Listed:
  • Tony Yuo

    (Department of Real Estate & Planning, University of Reading School of Business)

  • Neil Crosby

    (Department of Real Estate & Planning, University of Reading Business School)

  • Colin Lizieri

    (Department of Real Estate & Planning, University of Reading Business School)

  • Philip McCann

Abstract

In enclosed shopping centres, stores benefit from the positive externalities of other stores in the centre. Some stores provide greater benefits to their neighbours than others - for example anchor tenants and brand leading stores. In managing shopping centres, these positive externalities might be captured through rental variations. This paper explores the determinants of rent - including externalities - for UK regional shopping centres. Two linked databases were utilised in the research. One contains characteristics of 148 shopping centres; the other has some 1,930 individual tenant records including rent level. These data were analysed to provide information on the characteristics of centres and retailers that help determine rent. Factors influencing tenant rents include market potential factors derived from urban and regional economic theory and shopping centre characteristics identified in prior retail research. The model also includes variables that proxy for the interaction between tenants and the impact of positive in-centre externalities. We find that store size is significantly and negatively related to tenant with both anchor and other larger tenants, perhaps as a result of the positive effects generated by their presence, paying relatively lower rents while smaller stores, benefiting from the generation of demand, pay relatively higher rents. Brand leader tenants pay lower rents than other tenants within individual retail categories.

Suggested Citation

  • Tony Yuo & Neil Crosby & Colin Lizieri & Philip McCann, 2003. "The Management of Positive Inter-Store Externalities in Shopping Centres: Some Empirical Evidence," Real Estate & Planning Working Papers rep-wp2003-10, Henley Business School, University of Reading.
    • Handle: RePEc:rdg:repxwp:rep-wp2003-10
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    File URL: http://www.reading.ac.uk/LM/LM/fulltxt/1003.pdf
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    Citations

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    Cited by:

    1. Yun-Myong Yi & Tae-Hyoung Tommy Gim, 2018. "What Makes an Old Market Sustainable? An Empirical Analysis on the Economic and Leisure Performances of Traditional Retail Markets in Seoul," Sustainability, MDPI, vol. 10(6), pages 1-22, May.
    2. Francois Des Rosiers & Marius Theriault & Catherine Lavoie, 2009. "Retail Concentration and Shopping Center Rents - A Comparison of Two Cities," Journal of Real Estate Research, American Real Estate Society, vol. 31(2), pages 165-208.
    3. Hanna Larsson & Erik Asberg, 2011. "Not in the Shopping Cart - On the experiential aspects of retail shopping centers," ERSA conference papers ersa10p837, European Regional Science Association.
    4. Hermanus Geyer Jr, 2011. "The Retail City in Greater Birmingham – The changing face of urban retail districts as a result of retail-led regeneration and containment policy," ERSA conference papers ersa11p1358, European Regional Science Association.
    5. Henning Bundtzen, 2021. "Adapting Herzberg’s Motivation-Hygiene Theory to a VUCA World - A Repertory Grid Study," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 7, ejes_v7_i.
    6. Takahashi, Takaaki, 2013. "Agglomeration in a city with choosy consumers under imperfect information," Journal of Urban Economics, Elsevier, vol. 76(C), pages 28-42.

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