Government’s anchor offices

The other day I bought a hat. I had been intending to buy a hat for a while, but I bought this one because I happened to walk past it in the shopping centre I went to. I don’t usually go to shopping centres (I don’t drive much and I find them inconvenient and sterile), but this time I was going to a Medicare office.

The owners of shopping centres (or malls in the American parlance) have long understood that shops with significant drawing power because of their popularity or inevitability can bring customers that will bring business to tenants in the rest of the structure. Anchor stores are considered a basic starting point for a successful retail development. The positive externalities of tradition anchors, such as supermarkets or department stores are sometimes so great that, according to Rybczynski, they may pay no rent at all. The externalities to neighbouring stores of an anchor seems to be vast. A shopping centre owned by one company can capture that value and use it to bid for an anchor whereas the disparate owners of a traditional shopping district cannot. Since the supermarkets and departments stores like free rent, they’ll tend to open even more in shopping centres , increasing shoppers in them and also their effects on the urban environment which may include car traffic, reduced patronage of public transport, reduced variety of shops etc.

In this case, I was drawn to a shopping centre I would not have otherwise visited, by a Medicare office. I could just as likely have been going to an RTA (Roads and Traffic Authority) office. Both are fairly inevitable for most of the population. Both can serve, in their own way, as anchors. A beneficiary of this visit was the hatter, and her rent probably reflects whatever increased patronage comes from people traipsing in to get their rebates.

It’s actually quite notable how many RTA offices, and nearly every Medicare office I’ve seen (the one exception that comes to mind is Hunter St in Newcastle), are in such shopping centres. It makes sense that these locations are accessible and convenient to most people (and this is what each claimed when I contacted them), and also provide carpark for those about to do a driving test. But could the bureaucracy also be saving money for us by recapturing any externalities they are responsible for by getting cheaper rent from the Westfields and the like of this world?

There is reason to think this might be true. There is one kind of common government office I’ve never seen in a shopping centre; Centrelink. It’s an inevitable visit for most people who go there, but unlike Medicare and the RTA, it’s a much smaller proportion of the population and one that is selected mainly on the basis of not having much money. This wouldn’t make them very lucrative traffic for a shopping centre. If accessibility was the main criteria, they’d likely be in similar places to the other two departments. The fact they’re not suggests that the RTA and Medicare might well be getting a discount that Centrelink is not 1.

I also think it’s interesting to think about how government priorities might conflict with each other. Local councils might well desire that these offices locate themselves in traditional shopping strips, to revitalise them, or to reduce car traffic to shopping centres, or even just increase rates on smaller commercial properties. Parts of state governments might want people redirected to places accessible to public transport. Meanwhile the RTA and the federal government have an unorthodox tool that might change things. I’d be wary of using it, but it bears thinking about.

Also, I have added my wife’s name to my own here. This is purely to make myself more googleable. My name might honour my ancestors, but my parents didn’t consider that a distinctive character string might be useful/

1 I will note that most Centrelink offices also seem to be custom built, but with no apparent reason why their services need custom architecture or more space. Perhaps they struggle to get tenancy anywhere.

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About Richard Tsukamasa Green

Richard Tsukamasa Green is an economist. Public employment means he can't post on policy much anymore. Also found at @RHTGreen on twitter.
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Francis Xavier Holden
13 years ago

The Feds have plans to combine Centrelink, Medicare and Carelinks in the one building – don’t know how far its advanced.

Fyodor Bazarov
13 years ago

The Feds have plans to combine Centrelink, Medicare and Carelinks in the one building – don’t know how far its advanced.

If only they would combine that with Cufflinkslinks. Now _THAT_ would be a killer retail format.

This is purely to make myself more googleable. My name might honour my ancestors, but my parents didn’t consider that a distinctive character string might be useful

How inconsiderate of them not to anticipate interwebby search injuns. But I know what you mean – it’s why I changed my name from Caspar Aloysius Milquetoast.

Dave Gaukroger
13 years ago

I suspect that the reason for Centrelink’s larger, custom, premises is that they house much more than a shopfront. Compare that to a Medicare office where there’s very little that can’t be done at a front counter terminal.

James A
James A
13 years ago

The Medicare office I frequent isn’t in a shopping centre, and has what I suspect is a back office with people doing data processing. WA transport licensing centres aren’t in shopping centres either as far as I’m aware; one architectural feature of them is the large waiting area. Centrelink patrons aren’t just less desirable for shopping centre owners, they’re actively undesirable thanks to stereotypes.

derrida derider
derrida derider
13 years ago

Centrelink, and before it such things as Social Security and the Commonwealth Employment Service, has always had trouble finding willing landlords of existing properties. OTOH big companies find it very profitable to custom build for them with a sale/leaseback arrangement. It’s a great hedge too – when the shopping centres are doing badly Centrelink will be expanding, and vice versa.

I suspect the new “one stop shops” (for which both the customer service and fiscal benefits are far harder to realise than the government believes) will create exciting new profit opportunities for these firms. All at taxpayers’ expense, of course.

John B
John B
13 years ago

RTA Singleton, NSW, moved from a shared commercial centre to its own remodelled building during 2010. The car park is pokey, always filled to capacity and is extremely challenging for learners. Perhaps that was the attraction.

Medicare closed in Singleton last year or 2009.

Centrelink is in Town Plaza, a smallish mall.

No discernable trend here.