Blog > Pop-Up Shops and CRE

June 16, 2016

Pop-Up Shops and CRE

RealMassive | Commercial Real Estate

What do Modcloth, Kanye West, and Marmite all have in common? If you guessed “pop-up shops,” you’re correct! All three of these brands opened temporary stores, and those stores generated major buzz in the news and on social media.

Pop-up retailing isn’t a new phenomenon. Every September, retailers like Spirit Halloween creep into strip malls and former big box stores across America. By November, they’re nowhere to be found. Stores that are heavy on seasonal products are some of the earliest adopters of this retail model. Other forms of pop-up shops you might be familiar with are yard sales, food trucks, and farmer’s markets.

This market is booming, and Jeremy Baras, CEO and founder of PopUp Republic suggests that “the on-demand economy has caused brands to rethink the way they sell their products.” Baras also notes that “unique and innovative” retail experiences are what will capture the attention of consumers and engage them. Estimated to be a $50 billion industry, these temporary stores are a hidden opportunity for commercial real estate.

Larger brands typically turn to the pop-up model to generate publicity, while smaller brands embrace pop-ups because they don’t have the same overhead as traditional brick-and-mortar storefronts. Leasing for pop-up shops is definitely nontraditional, but the terms can be attractive to the budget conscious retailer.

These short-term leases don’t just benefit tenants. They also fill vacancies without locking landlords into low rent rates. Pop-up shops can also lead to long term leases. There’s a reason that online-only retailers like Modcloth have dabbled in physical stores: customers like to try before they buy. A pop-up lease is an excellent trial period for small business looking to expand in the near future.

A thriving pop-up store is “an open house that pays for itself,” according to David Sitt, Vice President of Operations at Sitt Asset Management. Instead of showing prospective tenants an empty space and forcing them to imagine the space’s potential, potential tenants actually see customers engaging with the store. It’s the best kind of CRE staging, because it’s not actually staged.

“Brands are using pop-ups to create exclusive shopping experiences for their customers,” according to Baras. Tenants, landlords, and CRE Professionals should take note. The pop-up model is one trend that both retailers and consumers are flocking to.