Pop-Up Shops: A Short-Term Solution to Vacancies

Bfree Real Bread a pop-up retail shop in empty storefront.

William Murphy / Flickr/CC 2.0

Landlords and their leasing agents must get creative and think out of the box when retail space remains vacant for too long. Not only does this empty space strain the property owner, but it creates an eyesore in the community. An easy way to remedy both problems is to lease the space out on a short-term basis.

There are plenty of businesses that lend themselves to these kinds of temporary occupancy. I am sure you've noticed an H&R Block store suddenly pop-up two to three months in advance of April 15th. But accountants aren't the only ones in need of temporary retail space. Holiday shops, mobile art exhibits, start-up designers, and well-known retailers with excessive merchandise also want to operate pop-up shops. 

Sharp Marketers Use Pop-Ups to Sell Their Wares

Some sharp marketers who have new products, or a completely new business, will also lease short-term space specifically to test their products or new business concept to determine if it will, in fact, sell in a particular market, or city. If any of these products or businesses are susceptible to localized influences, the marketers may lease space in multiple markets to make sure they cover their entire demographic.

In fact, the pop-up retail space market has become so popular with both landlords and tenants that there are multiple sites on the Web catering to landlords who want to list properties as well as those tenants searching for the right opportunity. One such popular website is TheStorefront.com, which even lets the tenant book the property online.

The Length of Leases and Other Considerations

Pop-up shop leases usually last between six weeks and a year, with many non-seasonal retailers willing to sign month-to-month leases that could result in long-term tenancy. Rents for pop-up shops tend to be less expensive than those secured by traditional leases, sometimes by as much as 50% below lease value

Of course, this concept works best when there is little or no space modification necessary. Generally, just adding desks and chairs or some kind of display shelving or fixtures is all that's required. And, these simple additions/changes can be easily implemented or erected and then torn down. Modifications are usually not a stumbling block because the tenant wants an easy move-in/move-out phase, and the landlord wants little or no refit between tenants.

The Pros and Cons for Landlords

While a long-term lease commitment is ideal, a pop-up operation is not entirely unattractive to landlords. That's because the prospect of bringing in some rent is better than no rent at all. The aesthetic value that a bustling pop-up operation can add to a location should also not be overlooked. It can only help consumer confidence and show off the retail space as being desirable. The short length of these leases can also be a huge benefit to landlords by providing immediate mortgage assistance while leaving prospects open for long-term leasers once the market (even a hyper-localized one) becomes more favorable.

When to Start Your Pop-Up Leasing Search

Summer is the ideal season to focus on leasing vacancies because costume shops, holiday decoration stores, and gourmet food and gift basket providers are in need of space for the upcoming holiday season. For more information on potential pop-up shop tenants or space, visit PopUpInsider.com.