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Why Pop-Up Shops Make Sense & Cents

Baron Hanson is the principal and lead consultant for RedBaron Consulting and Goal Line PR, a branding, strategy, and turnaround management firm based in Charleston, South Carolina. Hanson completed undergraduate and graduate studies at Harvard University, which included real estate finance and urban planning coursework. Goal Line PR recently launched, a global SSL website project linking CRE executives with Pop-Up Shop tenants and big-box retailers worldwide. He can be reached via [email protected], and @openpopupshops via Twitter and Facebook.

About a year ago, we wrote on the phenomenon of the Pop-Up Shop. We referred to it as a new phenomenon, when really it is anything but. Thanksgiving pumpkins and Christmas trees are sold via temporary roadside stands each year like clockwork. Concert memorabilia, event concessions, and even fireworks are sold via temporary tables, tents, or trailers. Vendors pop-up shop and close down according to event demand. In fact, The Super Bowl is one gigantic Pop-Up Shop. It lasts about three weeks all-in inside a different retail venue each year. The Masters Tournament is a seven-day Pop-Up Shop, only this store is held inside the same historic venue in perpetuity. Weddings are perhaps the second most profitable one-day-only Pop-Up Shops in history. Election Day precincts are of course number one. At this juncture in CRE history, it is time to apply the timeless idea of Pop-Up retail to appropriate empty spaces.

Temporary retail is best justified as a marketing experiment and re-branding tactic for each address under CRE management. For Pop-Up Shop owners-as-tenants, temporary leases are windows of opportunity to test retail strategies, collect local-area consumer data, and re-engineer new business models. For those annoyed that the Internet has eroded real retail space, Pop-Up Shop leases are a slight method of countering that erosion. Big-box retailers are especially reaching out into underserved markets via short-term Pop-Up Shop experiments. These test runs are usually held during A) the fall and winter holiday rush, and B) again once spring and summer lines are released. Pop-Up Shop tenants include couture fashion designers, international product brands (Adidas:, seasonal expansions (Toys R’ Us), and a variety of merchants large and small selling last year’s items at deep discounts. Small, custom batches of exclusive or vintage products are especially in high Pop-Up Shop demand. Economy and sports car brands are also engaging the strategy of highly creative, temporary Pop-Up showrooms (Ford: Cafes, cinemas, and even upscale spirit brands (Belvedere) have also popped-up. One property owner in New York recently rented a multi-floor, financial brokerage-style office space to a reality TV show for one month at a premium lease rate.

One CRE challenge is figuring out brokerage commissions, financial justifications, and transaction efficiency. These norms are obviously based on small percentages of long-term lease values, specifically the internal rates of return (IRR) that are used to determine property value, satisfy CRE investors, and afford astute council.  Here are 5 reasons why Pop-Up Shops might make some sense for you:

1) VIBRANT CRE STAGING: Who yearns to visit dusty, empty, boarded-up storefronts for rent? Answer: No one. However, a well-lit, well designed, open Pop-Up store creates wild excitement in real time –– then virally throughout cyberspace. Vibrant, active, trendy Pop-Up Shop tenancy creates new and measurable traffic patterns that revitalize value propositions inside and outside each façade.

2) EXCITING NEW MEDIA: What’s more, the colorful products, people, and displays inside Pop-Up Shops make way for stellar storefront and society page photography. These rare images parley into helpful PR and online content, at no cost to CRE brokers except for their time. The outdated model of merchandising CRE square footage via faxed floor plans and dusty walk-throughs is dying. Pop-Up Shops breathe new life into any space.

3) MORE RELATIONSHIP AT-BATS: Empty retail space accomplishes absolutely nothing. A beautiful and vibrant Pop-Up shop helps sell the space to long-term tenants as a place they can do actual business. Pop-Up Shop tenancy also allows the space to be occupied by a real retail business owner, their council, and their supply chain –– especially big-box retailers considering your area for expansion in the future.

4) TEST-DRIVING: In today’s economy, skittish tenants want to know exactly how day-to-day norms inside the space will play out. Issues such as customer parking, ventilation, inclement weather aspects, wiring and fixtures, and neighborhood norms can be sampled briefly.

5) SOME RENT IS COLLECTED: Whereas each lease term, fee, and NNN/liability agreement are up for negotiation, CRE rent is, in fact, collected. What’s more, no up-fitting takes place. Akin to trade show booths, the tenant handles light set-up and all cleaning before and after the Pop-Up. Modest rental funds collected can help offset marketing costs, fund future fitouts, or be used to commission brokers during dry spells.

Credit for the content of this post goes to:

RedBaron [branding + strategy + turnaround management] Majestic Square
211 King Street, Suite 104
Charleston, South Carolina 29401 USA
Office : 843.641.0331  Mobile : 843.628.9388

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