An Empirical Analysis of Community Center Rents

Abstract

This article is the winner of the Retail Real Estate manuscript prize (sponsored by the International Council of Shopping Centers) presented at the 2001 American Real Estate Society Annual Meeting. This study empirically models the determinants of community center rent. It employs a two-stage model that estimates center vacancy in the first stage and then includes predicted vacancy in a second stage demand model investigating endogenous and exogenous determinants of community center rent. The data includes information on maximum and minimum square foot rent for 118 community centers in Atlanta, Georgia. Maximum community center rent is highly correlated with a center’s predicted vacancy rate and location within the Atlanta area. Additionally, rent at both maximum and minimum levels is influenced by trade area purchasing power, property age and to a lesser extent by proximity to a regional mall, center design and neighborhood factors.