AN EMPIRICAL STUDY OF THE DETERMINANTS OF SHOPPING CENTRES RENTALS - CASE STUDY IN HONG KONG

Abstract

The importance of shopping centre studies has attracted a lot of research and empirical studies over the past few decades. Thus the concept of retail tenant mix and the critical presence of anchor tenant is also being observed. Pricing of shopping centres space becomes increasingly popular as an area of research. This study concentrates on the economic importance of the retail tenant mix and how it may affect the base rentals of the shopping centres. A total of 549 retail leases are taken from five shopping centres in the New Territories of Hong Kong to provide empirical evidence of the influence of tenant type on base rentals. The empirical results indicate that only some generic types of retail tenant may be an important determinant of the shopping centre base rentals. The results also show that base rents decrease with store floor size and the presence of anchor tenant. On the other hand, the rentals increase with centre turnover and anchor-size interactive. The results test the validity of retail theories from past academic research and its applicability for the current rent situation. This may suggest several implications and considerations in the rent review process and thus provide new directions for rent review policies in future.