IMPACT OF ANCHOR TENANTS ON RENTAL VALUE OF SUBURBAN RETAIL DEVELOPMENTS

Abstract

Anchor tenants are typical attractions in suburban shopping centres. They are usually the dominant pedestrians' generator and attractor. Despite its importance, there are no local studies carried out so far to evaluate the rental impact of these anchor tenants, in the Singapore suburban retail market. This study examines the impact of anchor tenants (departmental stores, foodcourts and supermarkets) on the rental value of 15 suburban retail developments that span across Singapore. It emphasizes on 2 crucial factors, namely: the visibility and distance to anchor tenants, using the multiple regression technique. The hypothesis is that tenants who are situated nearer to and visible from the anchor tenants are paying higher rental due to the positive impact from anchor tenants. The results reveal that there are no uniform impacts on rental of the 3 categories of anchor tenants. Both departmental stores and supermarkets have positive relationship between net rentals and visibility. However the impact of the supermarket is greater than the departmental store as the former results in a premium of 12.86% and the latter results in a premium of 6.18%. In contrary, foodcourt has a negative relationship between net rentals and visibility factor. Both departmental stores and supermarkets have no significant impact resulting from distance factor. However, foodcourts have significant impact resulting from distance factor. When the distance to the anchor tenant increases by a metre, net rentals of shops goes down by 0.990%. In view of the above results, it is advisable for shops to locate nearer to foodcourts or visible from departmental stores and supermarkets.