Supply-Side Policies and Retail Property Market Performance

Abstract

In this paper we are concerned with the relationship between the government's supply-side policies, including development control regimes, and the performance of the retail property market. It is argued that the regulatory environment impacts on the prices paid by both users and owners of retail space. This assertion is tested empirically. A range of measures of the complex and, at times, conflicting supply-side policies are incorporated into models of retail market values. The models are estimated using data for a cross-section of British cities and cover the period from 1998 to 2003. The results show that planning policy intervention has a more pronounced impact on the investor market than the user market. It seems that a proactive policy environment, with a strong emphasis on towncentre management and improvements to the shopping environment, will exert a significant influence on retail capital values and yields. These factors are less likely to impact on the rents paid by retailers who appear to be more concerned with representation across major markets and are less sensitive to differences in local policy stance.