The factors that determine shopping centre rent in Wuhan, China

Purpose – The purpose of this paper is to investigate the factors that affect the retail rent of shopping centres in Wuhan, an important city in central China. Design/methodology/approach – The study uses a data set of 68 shopping centres in urban Wuhan. A regression model is constructed to estimate the impact on retail rent of a composite range of variables that would capture the physical characteristics, spatial characteristics, potential attractiveness of shopping centres and market condition. Findings – The empirical findings suggest the ceiling height, closeness to metro line station, being situated in commercial central area, vacancy rate and income have significant impact on rental level. Unexpected, the retail mix has a significant negative impact on rent. The impact of the more determining factors found in Western research – size, age, parking space and anchor tenant – is not supported in the Wuhan study. Practical implications – While 68 shopping centres are included in the test, the sample size is relatively small. The comparatively short history of retail market in Wuhan would not allow to test the rent adjustment process. Originality/value – This is the first paper to investigate retail rent determinants in a second-tier city in China. The results of the study give designers, developers and investors critical insights into the determinants of retail rent in an emerging market.