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Abstract:
For more than a decade, since the early 1980's, a feeling has developed among homeowners and landowners in proximity to what have come to be known as Locally Undesirable Land Uses (LULUs) represent hazards to human health and safety. As a result, increasing numbers and amounts of claims for damages associated with property value diminution have been filed in both State and Federal Courts. The major reason given is the existence of "widespread public fear" and "widespread public perceptions of hazards" emanating from these LULUs. The list of claimed or perceived hazards is long and growing. The hazards include: water contamination from toxic and hazardous materials, soil contamination from toxic and hazardous materials, air contamination from toxic, hazardous and noxious materials, noise from airports or highways (or both), radiation from various sources, Electromagnetic fields (EMFs) and of course hazardous and toxic materials from landfills or waste storage facilities. All of this is in addition to visual and aural impacts that intrude on "quiet enjoyment". From these claims, and several important Court decisions based upon them, a mythology about the direct, linear relationship between "widespread perceived fear" and diminished values of residential properties proximate to these sources of perceived hazards has emerged. The objective of the research reported in this paper is to examine and test the premises on which that mythology has been constructed.

Abstract:
Property tax assessors and their valuation experts frequently argue that rentals of anchor department stores in regional/superregional shopping centers are "too low" and not representative of market rentals. Canadian shopping center data for the years 1975-1990 were analyzed to test this contention. The data included median figures for Gross Leasable Area (GLA), sales per square foot of GLA, and rental per square foot of GLA from 15 different categories of retail activities. Linear and logarithmic model specifications were tested to identify the functional form of the relationship between rental rates, size, and sales per square foot. The results demonstrate clearly and unequivocally that reported rentals for Canadian anchor department stores are entirely consistent with the lower marginal productivity (expressed in sales per square foot of GLA) accompanying their larger size. Those market rentals decrease at a decreasing rate as size in GLA increases, and increase at a decreasing rate as sales per square foot of GLA increase. A stable, consistent pattern of market behavior emerged that lends support to an income capitalization approach for valuing retail space, large or small.