Impact of visibility on indoor retail store rent

Abstract

Purpose

The aim of this research is to provide a new understanding of the concept of visibility in the realm of property research. Further, this study could propose a more accurate way of calculating retail unit rental price based on visibility. An accurate visibility quantification can influence rent negotiations between shopping mall management and potential tenants. This study can also assist shopping center management, shop owners and architects to have a better mechanism for determining the visibility value and the effect on the retail unit rental price.

Design/methodology/approach

The study uses data from 153 indoor retail stores in Jakarta and a sequential-transformative mixed method to answer an important question for modern retail management: How much would indoor store visibility affect rent? The authors developed a method to accurately measure an indoor retail store's object-based isovist – a visual field in which a number of observers can view the particular indoor store.

Findings

The study found that on average, each additional square meter person of visibility increases indoor retail rent price as much as IDR 40.74/sq m/month (USD 0.0027). Since visibility value is a variable with the greatest inter-store variation in this data set, the rent price difference between two stores with maximum and minimum visibility can reach IDR 100,904.62/sq m/month (USD 6.90). This finding is not just statistically but also financially significant since indoor inter-store retail rent price variation that can be directly attributed to visibility is about 38.4% of the average rent price in this data set.

Practical implications

Along with the rapid growth of e-commerce, numerous commercial properties are struggling to provide customers with a positive and distinct experience. Improving visibility can be a key spatial factor that will help shopping center designers, owners and management. The authors’ research can help shopping mall managers determine each store's optimum rent based on its visibility when negotiating with potential tenants.

Originality/value

The aim of this research is to provide a new understanding of the concept of appearance in the realm of property research. Further, this study could propose a more accurate way of calculating retail unit rental price according to the concept of visibility.

Citation

Gamal, A. and Romadhon, M.J. (2023), "Impact of visibility on indoor retail store rent", Journal of Property Investment & Finance, Vol. 41 No. 1, pp. 106-123. https://doi.org/10.1108/JPIF-01-2022-0004