This paper adapts the distributed lag model developed by Koyck to explain the propensity of developers to create retail space. The determinants of the stock of retail space are critically important to developers, lenders, appraisers, and researchers. The model is tested using retail sales data from the counties of North Carolina, USA. Results show that it takes more than 4 years for one-half of the increased retail space resulting from expanded retail sales to be brought to the market. These extensive lags in the adjustment process indicate prolonged cycles in markets for retail space.Keywords: Retail space demand, stock of retail space, cycles in markets for retail space, new retail development, forecasting retail space demand.
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