At a time when retail landlords are struggling with record vacancies, a novel sales strategy employed by some tenants is helping them fill the gaps and earn some additional rental income. Pop-up stores, which allow a retailer to sign a temporary lease lasting anywhere from two months to six months, have traditionally been scoffed at by mall and shopping center owners who could take their pick of permanent tenants. But in today’s environment, with retailers wary of new store openings, pop-ups are becoming a hot new trend and landlords are finding it suits them just fine.
“I am seeing more and more retailers testing out a temporary location, rather than locking into a long-term [lease],” says Jerry Welkis, partner with Welco Realty, Inc., a New Rochelle, N.Y.-based brokerage firm and member of the national X Team retail services network. “It’s a win/win kind of thing, because if a landlord has vacant space, he can get good tenants in and then get them out when he needs them out, and get some income as well.”
Earlier this year, casual apparel seller Gap Inc. secured temporary locations in Los Angeles and New York City to market its new product line, 1969 Premium Jeans. The stores will remain open through September. Luxury seller Gucci is planning to launch a traveling sneaker store in October, which will debut in New York City, move on to Miami and eventually appear in London, Berlin, Paris, Hong Kong and Tokyo, among other cities.
Meanwhile, this holiday shopping season, toy seller Toys “R” Us might open up to 70 pop-up stores on a national basis in markets previously occupied by defunct rival KB Toys, according to Welkis, whose firm worked with Toys “R” Us on two such locations in New Jersey. Footwear retailer Nine West has also been looking to do more pop-ups under its Bannister Shoes name. The chain uses the temporary locations to sell leftover merchandise. Target has used the strategy as well. For example, it opened up several temporary bodegas in New York City last year as a way of establishing a presence in Manhattan—where it currently operates stores.