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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.
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