The effect of accessibility on retail rents - testing integration value as a measure of geographic location Olof Netzell, Real Estate Economics, Royal Institute of Technology, Stockholm Spacescape AB

Morphological map of the urban area under study Integration values Cover the public area with sight-lines (axial lines) Convert the axial map into a mathematical graph

Integration values Mean depth of a node = mean number of (minimum) steps from a node to all other nodes

Interpretation of integration values Few turns to reach other street segments = high integration values Integration value can be defined up to a certain number of steps/turns

Hypothesis Integration values correlated with pedestrian traffic Can integration values explain retail rents? Regress retail rents on integration values

Data Integration values of streets in Stockholm Survey to shops asking about their location and rental contracts

The regression Dependent variable: Rent per square meter ”Main” explanatory variables (expected sign): - Integration value (+) - Distance to CBD (-) Control variables variables (expected sign): Proportion of area that is shop area (+) Area (?) Shop located in mall, dummy (+) Not indexed rent, dummy (+?) Turnover based rent, dummy (+) Property tax included in rent, dummy (+) New shop, dummy (+) Discount on rent for parts of the contract period, dummy (+) Shop not on street level, dummy (-)

The regression Multiplicative form

VariableCoefficientStd. Errort-StatisticProb. C ln(inv) ln(dist) ln(floorratio) ln(area) Dmall Dnotindex Dturnover Dtax Dnewshop Ddiscount Dnotstreet R-squared0.73 Adj. R-sqd.0.70 Note: White Heteroskedasticity-Consistent Standard Errors & Covariance Note: Estimated city centre used to calculate dist Regression results, ln(rent/m2) dependent variable

Morphological map of the urban area under study Integration values Cover the public area with convex spaces

Integration values Axial map Draw sight-lines (axial lines) that cross all convex spaces

Integration values Convert the axial map into a mathematical graph

Example Hillier 1996

Integration values Mean depth of a node = mean number of (minimum) steps from a node to all other nodes Relative asymmetry = mean depth standardized to the interval 0-1

is the RA of a standardized node in a standardized graph of size L Integration values RA depends on the number of nodes Real relative asymmetry Main component: mean depth

Mean Median Maximum Minimum Std. Dev. Skew Kurtosis rent sqm Dist Inv floorratio Dnotindex Dnewshop Dturnover Ddiscount Dmall Dtax Area Dnotstreet Descriptive statistics. No of observations 114.

rent sqmdistinv floor ratio Dnot index Dnew shop Dturn over Ddis count Dmal lDtaxarea dist-0.47 inv floorratio Dnotindex Dnewshop Dturnover Ddiscount Dmall Dtax area Dnotstreet Correlations

Name Variable definition rent sqmTotal rent (not including VAT) divided by total area in square meters. distDistance to the city centre, Sergels torg. invLocal integration value at the location of the shop floorratioShop area divided by total area (total area may include storage and office area) DnotindexDummy-variable. Dnotindex =1 if the rent is not indexed, 0 if it is indexed. DnewshopDummy-variable. Dnewshop=1 if the shop is newly established, 0 otherwise. DturnoverDummy-variable. Dturnover =1 if the rent is based on turnover, 0 otherwise. DdiscountDummy-variable. Ddiscount=1 if there is a discount on the rent for parts of the rental period, 0 otherwise. DmallDummy-variable. Dmall =1 if the shop is located in a mall, 0 otherwise. DtaxDummy-variable. Dtax=1 if property tax is included in the rent, 0 if tax is paid separately. Areatotal area in square meters Dnotstreet Dummy-variable. Dnotstreet=1 if the shop is not located on street level, 0 otherwise Table 1 Variable definitions