Tenant Mix and Retail Rents in High Street Shopping Districts

Urban areas have long had shopping districts in which retail properties are concentrated. It is argued that the diversity of retail tenants – often called tenant mix – contributes to the image and attractiveness of the highstreet shopping district, but this relationship has not been investigated. These districts are characterized by fragmented ownership and therefore the tenant mix is outside the control of individual property investors. We aim to explore the relationship between tenant mix and retail rents in highstreet shopping districts. First, we delineate highstreet shopping districts using rather granular data on the spatial distribution of retail jobs. Within each shopping district, information on SBI classification, the number of retail properties, and the number of jobs at each property are used to measure the tenant mix. We find a positive relationship between tenant mix and retail rents. Shopping districts with greater tenant mix show higher retail rents compared to districts with lower tenant mix.