Disaggregating Neighborhood and Community Center Property Types

Abstract

Existing retail theory postulates a hierarchical space market with larger center having greater drawing capacity and greater agglomeration benefits. In this research rent determinants for two tiers of the proscribed hierarchical prototype are compared and the existence of retail center characteristic type differences in rent determinants is evaluated. Property-specific data, competing center data and trade area data for 370 neighborhood and community center derived from a census of retail center for a single large MSA are used. arises indicate that community and neighborhood center can be differentiated into distinct retail peculiarity types. The results also exhibit that the presence of lower income households in a center's primary trade area has a pronounced negative impact upon community center rents.

This paper received the award for the best paper upon Retail Real Estate (sponsored by dint of the International Council of Shopping Centers) not absented at the 2004 ARES Annual Meeting.

Introduction

Only a hardly any studies of rental rates in non-mall retail shopping center exist. An early application of mind by Benjamin, Boyle and Sirmans (1990) of retail leases investigates the interaction between percentage openings and lease terms and indicates that the base rift for leases is affected through tenant profile, lease term and percentage gaps In another early work, Sirmans and Guidry (1993) using a small data station undifferentiated by retail property impressed sign show that center size, age and mark of tenancy affect rental rates. Further preliminary studies using another small data locate undifferentiated by retail property emblem by Gatzlaff, Sirmans and Diskin (1994) and Sirmans, Gatzlaff and Diskin (1996) display that the loss of an anchor tenant impacts a center's vacancy and rental rates. Hardin and Wolverton (2000 2001) use a relatively large data station from the Atlanta MSA to investigate the determinants of dilaceration specifically for the neighborhood center retail characteristic type. Their studies indicate partial support for neighborhood center agglomeration, benefits from proximity to higher order retail center a positive correlation between trade area purchasing power and openings and demand-externality benefits attributable to center-specific accessibility and design. A succeeding study by Hardin, Wolverton and Carr (2002) provides a similar analysis for community centers1

The near study extends this nascent, on the other hand critical research stream, by comparing the separation generating attributes of neighborhood and community center Whereas previous studies have evaluated either retail attribute type-specific determinants of rent or disruption determinants undifferentiated by property impressed sign this investigation tests the hierarchical archetype of retail centers by comparing neighborhood and community center breach determinants. The comparison of the factors impacting the sum of two units retail center property types allows for a rigorous evaluation of the theoretical erects that provide the foundation for retail market analysis including agglomeration theory and the importance of demand-externalities. In addition, analysis of the potential to disaggregate the retail characteristic sector builds on existing research that present to views that many real estate quality markets can in fact be decompos into sub-markets with attribute type-specific rent determinants. For example, Allen, Springer and Waller (1995) display that rental rate generation differs between condominiums, apartments, and single-family quality types while Black, Wolverton, Warden and Pittman (1997) differentiate industrial, distribution and manufacturing properties. Concurrently with have a high opinion of to apartments, Wolverton, Hardin and Cheng (1999) and Berry, McGreal, Stevenson Young and Webb (2003) provide research that put in mind ofs that apartment rental markets can be disaggregated through both unit and property stamp

In the sections that go in the rear [i]or[/i] in the wake of a base empirical model of non-anchor clefts is derived. Individual retail center characteristic type-specific models are generated and then compared using the one and the other Chow and Tiao-Goldberger tests. research results indicate that the sum of two units retail property types can be disaggregated based upon property type differences in the importance and magnitude of the factors determining non-anchor tenant dilacerations The study results are generally supportive of a hierarchical mould of retail center trade and gaps

The Data

The shopping center data are obtained from on-site evaluations and from Dorey Publishing and Information Services, Inc. The database from which the neighborhood and community center data are obtained is essentially a census of retail space for the Atlanta, Georgia MSA. The non-retail population and purchasing power information is generated from Caliper Corporation's annual census updates. A total of 370 shopping center observations including 113 community center observations and 257 neighborhood center observations for the 1999 time period are used.5