If there’s one thing that’s been made perfectly clear over recent years, it’s that e-retail has had a tremendous impact on commercial real estate. As consumers have changed their shopping habits and as retailers of all sizes have had to keep up with the digital times or close their doors permanently, building landlords, owners, and developers are holding vacant spaces.
Before nailing shut the coffin on brick-and-mortar stores, now – today – would be a great time to rethink how to fill these vacancies on a short-term-but-profitable basis. The pop-up economy is a solution that may boost CRE. These limited, seasonal or otherwise short-term businesses that need to lease space fast can rejuvenate the economy in areas while salvaging a CRE investor’s ROI on an empty space.
Ironically, the pop-up phenomenon is an outgrowth of e-commerce. In a digital field that is growing increasingly crowded, online retailers have had to find new and creative ways to reach consumers and to test out new products and brands. At the same time, a younger consumer demographic accustomed to swiping left or right for everything is, at the same time, craving experiential activities that can be shared on social media.
The answer, as it turns out, is the one thing e-commerce has decimated … the one thing retailers have known since the dawn of the marketplace: There is really no substitute for face-to-face interaction between shop owner and consumer. And the pop-up seems to check all of the necessary boxes while delivering this in-person experience.
Most people are familiar with seasonal pop-ups, such as costume stores in the weeks leading up to Halloween. As a $50 billion industry, though, there is a lot more variety in the pop-up world. In fact, pop-ups encompass a broad range of themes, including new businesses, product introductions, museums, art galleries, and spaces filled with selfie opportunities. Furthermore, there are now several online services to help link building owners and pop-up tenants.
To help attract tenants, pop-up leases are short term, generally running from six weeks to a year, although – depending on the business – this could be modified. In addition, pop-up rents can be as much as 50% lower than those with a traditional lease. The justification for this is that very little space modification needs to be done to the vacant space. Tenants require ease in moving and moving out, while landlords do not want to get bogged down with constantly remodeling or providing extensive maintenance.
Pop-ups come in all shapes and sizes, from a store within a store to a collection of pop-ups under a single roof to vacant street level space to kiosks to mall locations. With the success of a pop-up comes buzz, which then leads to increased foot traffic, publicity, a rejuvenation of the property and surrounding neighborhood, and a chance to put an energized spotlight on the desirability of the property’s location.
For the landlord/owner, all of this adds up to generating revenue – either from a single or a series of pop-ups, a short-term pop-up that may want to make a longer commitment, or a long-term tenant that sees your property in a whole new light.
At Morris Southeast Group, we’ve written extensively about the impact of e-commerce and the potential in repurposing buildings. In each case, we’ve always been excited. It’s the same with pop-ups because South Florida has already witnessed their impact – just take a look at Wynwood in Miami and MASS in Ft. Lauderdale – and there are more opportunities all around us. To learn more about pop-up possibilities, property investment opportunities, and/or our other services, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at firstname.lastname@example.org.