AN IMPROVED METHODOLOGY FOR THE ANALYSIS OF RETAIL TRADE AREAS BY HEIN DU TOIT submitted in fulfilment of a part of the requirements for the degree PHILOSOPHIAE DOCTOR (REAL ESTATE) in the Faculty of Engineering, Built Environment and Information Technology, University of Pretoria July 2018 DECLARATION I, the undersigned, hereby confirm that the attached thesis is my own work and that any sources are adequately acknowledged in the text and listed in the bibliography. I accept the rules of the University of Pretoria and the consequences of transgressing them. This thesis is submitted in fulfilment of the requirements for the PhD (Real Estate) degree at the University of Pretoria. It has not been submitted before for any other degree or examination at any university. Signature of acceptance and confirmation Date Student name: Hein du Toit (9152121) 1 | P a g e TABLE OF CONTENTS ABSTRACT ............................................................................................... 8 CHAPTER 1: INTRODUCTION................................................................... 10 1.1. BACKGROUND ................................................................................................. 10 1.2. THE PROBLEM AND ITS SETTING .................................................................. 12 1.2.1. Problem Statement ........................................................................................ 12 1.2.2. Contextualising the problem ........................................................................... 14 1.2.3. Purpose of the Study ...................................................................................... 16 1.2.4. Formulating the Hypothesis ............................................................................ 17 1.2.5. Guiding questions .......................................................................................... 18 1.2.6. Delimitations and limitations ........................................................................... 19 1.2.7. Significance of the Study ................................................................................ 20 1.3. DOCUMENT OUTLINE...................................................................................... 21 CHAPTER 2: RESEARCH METHODOLOGY ............................................ 27 2.1. INTRODUCTION ............................................................................................... 27 2.2. THEORETICAL FRAMEWORK ......................................................................... 27 2.3. TYPE OF DESIGN AND THE ASSUMPTIONS THAT UNDERLIE THE DESIGN .......................................................................................................................... 28 2.4. DATA SAMPLING AND DATA COLLECTION ................................................... 28 2.5. DATA ANALYSIS STRATEGIES ....................................................................... 29 2.6. METHODS OF ACHIEVING VALIDITY .............................................................. 30 2.7. INTERPRETATION OF RESEARCH FINDINGS ............................................... 31 2.7.1. Relationship to literature and theory ............................................................... 31 2.7.2. Relationship to practice .................................................................................. 31 2.8. CONCLUSIONS ................................................................................................ 33 CHAPTER 3: ECONOMIC FRAMEWORK ................................................. 34 3.1. INTRODUCTION ............................................................................................... 34 3.2. ECONOMICS AND HUMAN BEHAVIOUR ........................................................ 34 3.3. DEFINING REAL ESTATE AND RELATED CONCEPTS .................................. 36 3.3.1. Real Estate .................................................................................................... 36 3.3.2. Real Estate Market ......................................................................................... 37 3.3.3. Asset Market .................................................................................................. 38 3.3.4. Flow of Real Estate ........................................................................................ 38 3.3.5. Endogenous Variables ................................................................................... 39 3.3.6. Exogenous Variables ..................................................................................... 40 3.4. FACTORS AFFECTING SPACE AND CAPITAL MARKETS – AND EQUILIBRIUM ................................................................................................... 40 3.5. RELATIONSHIP BETWEEN REAL ESTATE AND ASSET MARKETS .............. 44 3.5.1 Defining the Model ......................................................................................... 44 3.5.2 Model Assumptions ........................................................................................ 47 3.5.3 Quadrant Description and Interaction ............................................................. 53 3.5.4 Application Possibilities .................................................................................. 65 3.5.5 Introducing Impacts to the FDW Model .......................................................... 66 3.6. CONCLUSIONS ................................................................................................ 72 2 | P a g e CHAPTER 4: A CRITICAL APPRAISAL OF CENTRAL PLACE THEORY ............................................................................................. 76 4.1. INTRODUCTION ............................................................................................... 76 4.2. LITERATURE REVIEW ..................................................................................... 76 4.2.1 Von Thünen – The Market Town and Concentric Circles ................................ 77 4.2.2 Weber – Critical Isodapanes and Agglomeration ............................................ 79 4.2.3 Lösch – Market Areas and Spatial Structure of the Economy and Christaller – Central Place Theory...................................................................................... 80 4.2.4 Alonso, Muth & Mills – Bid Rent Theory ......................................................... 89 4.2.5 Other Theoretical Contributions – Burgess, Hoyt, Harris & Ullman ................. 93 4.3. THEORIES TESTED ......................................................................................... 96 4.3.1 Methodology .................................................................................................. 97 4.3.2 Central Place Theory Tested .......................................................................... 97 4.3.3 Bid Rent Theory Tested ............................................................................... 102 4.4. CONCLUSIONS .............................................................................................. 108 CHAPTER 5: PERCEPTIONS ABOUT THE IMPACT OF DUAL AND MULTIPLE FOOD GROCER ANCHORAGE ON THE PERFORMANCE OF SHOPPING CENTRES IN SOUTH AFRICA .............................................................................. 113 5.1. INTRODUCTION ............................................................................................. 113 5.2. LITERATURE REVIEW ................................................................................... 114 5.3. A PERSPECTIVE ON CONSUMER BEHAVIOUR ........................................... 118 5.4. RESEARCH METHODOLOGY ........................................................................ 120 5.5. RESULTS: PERSPECTIVE OF SHOPPING CENTRE OWNERS AND INVESTORS .................................................................................................... 123 5.6. RESULTS: PERSPECTIVE OF FOOD GROCER RETAILERS ....................... 126 5.7. RESULTS: STATED CONSUMER PREFERENCES ....................................... 127 5.8. CONCLUSIONS .............................................................................................. 134 CHAPTER 6: THE IMPACT OF DUAL AND MULTIPLE FOOD GROCER ANCHORAGE ON THE PERFORMANCE OF SHOPPING CENTRES IN SOUTH AFRICA ......................................... 137 6.1. INTRODUCTION ............................................................................................. 137 6.2. RESEARCH METHODOLOGY ........................................................................ 138 6.3. DEFINITIONS AND CONCEPTS ..................................................................... 139 6.4. QUANTITATIVE ANALYSIS ............................................................................ 141 6.4.1 Comparative Assessment of Single versus Dual/Multiple Grocer Anchored Shopping Centres, 2002 – 2013 ................................................................... 141 6.4.2 Foot Count and Trading Density Data Analyses ........................................... 143 6.4.3 Analysis of foot counts in relation to food grocer anchorage (centres between 25 000m2 and 50 000m2) .............................................................................. 147 6.4.4 Analysis of trading density data in relation to foot counts and grocer anchorage ..................................................................................................................... 150 6.5. CONCLUSIONS .............................................................................................. 155 3 | P a g e CHAPTER 7: TECHNIQUES FOR THE ANALYSIS OF TRADE AREAS: RETAIL DIVERSIFICATION