At the last RICS conference Jones and Orr examined the long term components of urban office rents. The paper identified the variation in supply constraints as a crucial influence leading to the long term rent differentials in declining core cities and persistence effects in expanding core centres. Research into spatial interaction in the property market is limited, and confined to the regional level. Rosenthal (1986) considers regional house price interaction using cross- spectral analysis but his results are inconclusive because of the brevity of his time series. Recently Alexander & Barlow (1994) examine seasonality and cointegration of regional house prices and find a ripple effect from the south east. Wang & Matysiak (1994) industrial regional trade trends. Their results are not easy to explain but this may be because property markets are urban rather than regional. The emphasis of this research to date is on quantifying trends rather than underlying causality. A key issue is the transmission mechanism which is likely to vary with land use. At one level rents are function of consumer demand/local income which implies no spatial interaction. Following lever (1979) who identifies leading and lagging local labour market areas this would suggest that lead retail centers (with respect to rents) will be the largest ones. However, Jones & Orr (1996) suggest that the supply of retail space is a more significant variable than previously thought in influencing retail rents. here it is possible that the changing size of retail centres can redirect demand and create spatial rent interaction. This is likely to occur within a given retail hierarchy. The purpose of this paper is to test these arguments trough a number of case studies/experiments. Green, Owen & Winnett (1994) identify key difference in local unemployment series reflecting the relative experience of economic growth/recession over the last two decades. Initially we envisage to selecting two retail hierarchies, probably the West of Scotland and another in the south of England, to analyse the dynamics of rental change. The research will be based on biannual urban rent data for 1977-94 provided by Hillier Parker. the analysis will be based on a range of techniques-cross-spectral analysis, Granger Causality test, cointergration and VAR models. The intention will be to identify leading and lagging retail centres and to asses to what extent this verifies our original hypotheses.

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