4 Reasons why the Holidays are the Perfect Time for Retail Landlords to Try Hosting Popup Tenants
This guest blog post comes to the blog fromMohamed Haouache, CEO of Storefront.
Maybe the only thing worse than getting a lump of coal for Christmas is watching your retail space sit empty for the prime holiday season.
Such is the plight of thousands of retailers across the country this year, as America’s ‘Retail Apocalypse’ continues to gain momentum. New giants like Amazon and a small army of up-and-coming ecommerce brands are rewriting the playbook for connecting to consumers. This is prompting even retail’s old guard to rethink the traditional brick-and-mortar model to accommodate today's 'click-and-order' consumers.
No one can say exactly where the market for retail space is going, but one clear trend is emerging: retail tenants are increasingly looking for shorter tenancies to adapt to this increasingly dynamic market. Just as WeWork and its peers are offering a flexible alternative to the long-term lease for office space, savvy landlords and brokers are offering an alternative to the long-term lease for retail space. They’re embracing the future and opening their doors to a new generation of retailers looking to secure retail space for less than a year, and in some cases as little as one day.
Some landlords initially refuse to entertain offers for these short-term deals. They dismiss popups as a passing fad that takes extra legwork for less revenue. They cling to the assumption that the sea-change in retail is actually just the familiar business cycle, even though vacancies continue to rise in spite of record high stock prices and the lowest unemployment rate in 17 years. In such cases, we like to invite them for a walk around New York’s Soho to see the proliferation of flashy popups from enterprise brands like JCPenny and Victoria’s Secret mixed in with vacant retail space. Once they see the glass half-full, they quickly begin to recognize that there are some notable benefits to opening doors to short-term tenants, especially during the holidays.
1. Access a whole new class of tenants
A whole new generation of ecommerce brands and experiential marketing agencies are hunting for short-term occupancies. And even the classic retail tenants are experimenting with targeted brand activations, seasonal roll-outs, and market-testing popups. By listing your space for short-term use, you can open your doors to a new and fast-growing market segment.
2. Dust off a blighted property
Let’s face it: empty property looks unwanted and undesirable. Hosting a bustling popup is a great way to reactivate a space and show off its value. Landlords frequently come to Storefront because they want to wake up a space that has been sitting empty for six months or more. A unique popup can quickly clear out the cobwebs and advertise your space’s long-term potential.
3. Stay nimble
In a shifting market, short-term occupancies allow owners to keep revenue coming without having to commit to a long-term lease at a drastically reduced rate. If you’re holding out for that ideal high-paying long-term tenant, popups are a great way to get through a slow spot without locking your space into 5- or 10-year lease at a bargain rate.
4. Fill a gap in tenancies due to sale, litigation or redevelopment
Every day of vacancy is money down the drain. If a property has already been leased but the tenant isn’t moving in for over a month, popups offer a great opportunity to get the maximum possible revenue out of the space. In other cases, special circumstances like disputes or redevelopment plans may make it difficult to attract long-term tenants or commit to a traditional lease. Short-term tenants present a unique solution to those challenges.
Popups can make a dreary holiday vacancy a lot merrier for landlords and brokers trying to operate in this tough retail market. And by stepping outside the traditional and engaging with retailers and experiential brands in innovative ways, it announces to the world that your doors are open to the new retail economy.
