Geotracking as an indicator of prime location

University essay from KTH/Fastigheter och byggande; KTH/Fastigheter och byggande

Abstract: In Sweden, there is practically free rental setting in the retail market. While there is an indirect tenancy regulation that protects the tenant, it does not prevent the establishment of market rents.Rent levels are generally highest in the central business district (CBD), following a rental pattern that confirms the monocentric urban model. It is also confirmed in the classic works of Von Thünen, Alonso, Mills, and Muth, that strong links exist between price and centrality. Stockholm's inner city is a typical example of this. The purpose of this thesis is to investigate whether geotracking can be used as an indicator of a prime location. Since the monocentric model claims that rents levels should be highest in the most central parts of a city, geotracking will be investigated as a tool for measuring the degree of centrality. The geotracking variable is based on the number of passing pedestrians outside retail premises, while rent levels are collected by leasing contracts. Geotracking serves as anexplanatory variable in the hedonic model where rent levels work as the dependent variable.This thesis assumes that a more central location, within the CBD, has a higher number of passers by than a less central one. This is a quantitative research-based study on walking data from Footfall, as well as market information provided Cushman & Wakefield. Footfall is a tool within Datscha that quantifies peoples movement patterns by tracking them through the mobile phone network. During this study, over 370 leases will be examined, of which approximately 250 contracts will be used in a regression analysis. All premises are located in the central parts of Stockholm. The relationship between rent levels and pedestrian traffic will be analysed in a traditional hedonic price equation with linear regression analysis. Through Footfall, the average number of passersby is collected for each address between March 2019, up until March 2020. The study results in a positive, and statistically significant, relationship between the number of passers by and rents for retail. In other words, rent levels increase as pedestrian traffic past the premises increase. However, the statistical relationship is weak. In the past, numerous studies on the relationship between location, rent, and property prices have been carried out. However,to our knowledge, there are no earlier studies of significance where Footfall- data has been usedfor academic purposes, until now.

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