Optimal Competition and Allocation of Space in Shopping Centers

Thomas Miceli (), C.F. Sirmans () and Denise Stake ()
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C.F. Sirmans: Center for Real Estate and Urban Economic Studies School of Business Administration University of Connecticut Storrs, Connecticut 06269-2041, http://www.sba.uconn.edu/index.htm
Denise Stake: Allegis Realty Investors Hartford, Connecticut 06163, http://www.allegisrealty.com/

Journal of Real Estate Research, 1998, vol. 16, issue 1, pages 113-126

Abstract: This article explains why a profit-maximizing developer may include multiple, competing outlets in a shopping center. While competing outlets presumably dissipate potential profits, thereby lowering aggregate rents that the developer can extract, the presence of shopping externalities causes the developer to be interested not just in individual store profits, but also in the traffic they generate throughout the center. And since competition among identical stores increases traffic, it can create an offsetting advantage that favors multiple outlets. The article provides a theoretical analysis of this problem and illustrates its implications for tenant mix by applying the theory to the problem of filling a vacant store. The paper concludes by explicitly relating the analysis to Brueckner's (1993) model of the optimal allocation of space in shopping centers.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 1998
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