Property value under pressure - Cushman & Wakefield

Property value under pressure

Fragmented ownership of shopping centers affects the value of retail units negatively. This is the outcome of a study by Barzien Khoshbakht, appraiser at Cushman & Wakefield. His study shows that a single ownership structure is preferred above a fragmented ownership structure for small and large shopping centers in terms of rental levels. In fragmented ownership structures rents in smaller shopping centers are three percent lower than average and even ten percent lower than average in large shopping centers.

Khoshbakht studied the relationship between the value of retail units in shopping centers and the fragmentation of ownership for his master´s degree at the University of Technology in Eindhoven. A fragmented ownership structure implies that the shopping center is owned by two or more owners. This appears to be a barrier for major renovations, relocation of retailers and reorganizations in inner urban retail areas. Khoshbakht explains: “This is mainly caused by the unwillingness of some property owners to engage in discussions about new initiatives. Besides the maintenance of the shopping center, renovations are necessary to keep retail sales and patronage at the same level. Shopping centers that continue to renew by creating excitements and a new environment will perform better.”

Other factors affecting rents

The value of retail units in shopping centers is not only affected by the fragmentation of ownership. Other significant findings of the study are as follows:


  • a shopping center´s size is highly significant in predicting rents. Small shopping centers (less than 21 retail units) have an average market rent of 181 €/ m2, mid-sized shopping centers (21 up to 40 retail units) have an average market rent of 205 €/ m2 and large shopping centers (41 up to 100 retail units) have an average market rent of 295 €/ m2; 
  • an increase of 10,000 inhabitants within a radius of 5 km from the shopping center commands 1.6 €/m2 higher rents; 
  • an increase of € 1,000 income per person in the city district where the shopping center is situated in, results in a growth of 3.7 €/ m2 in rents; 
  • high parking facilities command 22 €/ m2 higher rents; 
  • an increase of one year in age results in a decrease of 0.9 €/ m2 in rents.

Conflicting findings

To achieve the study´s purpose, a regression model based on spatial and non-spatial determinants of shopping center rents is estimated, since rents and value are related. A dataset of 97 planned shopping centers, situated on supportive retail locations in the Netherlands is used. The findings from the study suggest that a single ownership structure is preferred above a fragmented ownership structure for small and large shopping centers, in terms of generating higher rents. Mid-sized shopping centers show contrary results. The answer probably lies in the type of fragmented ownership structure for the mid-sized group in this study´s sample. The ownership of some shopping centers consist of large stakeholders. In contrast to small individuals, these large stakeholders are often willing to cooperate in new initiatives. These shopping centers have relatively high rents, which alters the empirical results.

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Ingrid Wallisch

PR & Communicatie Manager

Amsterdam, Netherlands

Phone +31 208002048

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