Chain Affiliation, Store Prestige, and Shopping Center Rents

Abstract

In this study, we examine whether, and to what extent, chain affiliation within regional and super-regional shopping centers affects store rent levels. The rent impact of chain affiliation is assessed in interaction with store prestige. Our database includes 1,367 retail leases in the 2000–2003 period for 11 regional and super-regional shopping centers in Montreal and Quebec City, Canada. The findings suggest that, when compared with independent and local chain-affiliated stores selling low-end goods, middle and high-end goods chain stores operating at upper levels of affiliation are charged a rent premium. Such a profit-sharing scheme between major, high-end chain stores and mall owners, it is argued, will occur under a regulatory environment that limits the local supply of top retail space.