There’s no doubt about it—from a commercial real estate perspective, 2019 will go down as the year of the pop-up. Traditionally, pop-up stores have been viewed a type of “placeholder” tenant; a consolation prize for landlords struggling to fill their retail spaces.
It’s true that in decades past, pop-ups have been primarily comprised of seasonal retailers, such as Halloween costumes and Christmas decor. While the seasonal pop-up market is still growing, these types of spaces are no longer reserved solely for these retailers.
According to Cushman & Wakefield’s Pop-up-a-Palooza report, the rise in pop-up spaces across the U.S. represents an exciting reinvention of the retail market that just might be here for the long haul.
The Evolution of Pop-Up Store
Today, the pop-up arena is where we see some of the greatest innovation in the retail market. Startup brands, local entrepreneurs, global retailers, and even non-retail businesses have begun embracing pop-up locations as a valuable marketing and sales tool.
One of the most exciting pop-up trends on the horizon is the growing focus on experiential concepts. Brands are investing in unique, memorable experiences for customers as a means of building brand awareness, driving sales growth, or even reinventing their public image. These pop-ups often center around fun experiences like food and beverage, virtual reality, games, and photo-worthy backdrops or activities.
Pop-ins—when a brand uses space within an existing retailer’s store—are one of the fastest-growing segments of the pop-up market. These mutually beneficial partnerships provides buzz and foot traffic for both the pop-in business and the host business. Department stores are leading the charge when it comes to hosting experiential pop-ins.
How Landlords Benefit from Pop-Up Spaces
One of the key benefits from an investment perspective is that these stores typically require almost zero long-term investment in tenant improvements from the landlords. Pop-ups are a reliable way of generating revenue from an otherwise-vacant property, while continuing to market the space to potential long-term tenants.
Because of the short-term commitment, landlords are sometimes able to rent these spaces out to retailers at a premium—in some cases, as much as 50% above what would have been the going rate (according to an informal study by Cushman and Wakefield).
Additionally, pop-ups are increasingly being used as a trial run for businesses who may later rent the space on a long-term basis. Dozens of retailers, small and large, have opened pop-up stores and later converted them to permanent locations. As a landlord, staying open to these pop-up opportunities may yield long-term commitments (and income) in the end.
Noteworthy Cleveland Pop-Up Shops
One of the city’s biggest pop-ups in 2019 was the Cleveland Flea Holiday Pop-Up Shop at the Van Aken Market Hall. This event spanned six weeks, from mid-November to the end of December, and featured a wide array of Cleveland-based vendors.
Cosmetics, jewelry, candles, apparel, antiques, and home decor were just a few of the retail products featured during this event. For brands, this pop-up was an incredible opportunity to build awareness and drive sales; for shoppers, it was a chance to purchase locally made goods before the holiday season; and for the Van Aken Market Hall, it was a huge source of foot traffic and revenue.
Over the summer, apparel brand GV Art and Design opened a pop-up store in the historic Caxton Building—located one block from Progressive Field—just before thousands of baseball fans descended on the city for MLB All-Star Week. This was a strategic move to capitalize on the visiting spots enthusiasts who would be near Progressive Field, but likely wouldn’t make it out to their Lakewood location.
As an example of a non-retail experiential pop-up, Lake Effects was a one-of-a-kind pop-up holiday bar that came to Cleveland between November 29 and December 31, 2019. Visitors were treated to beer and craft cocktails, along with a healthy dose of holiday cheer and festivities.
What’s Next for Pop-Ups?
Cushman and Wakefield predicts that pop-ups in their current state are likely a cyclical phenomenon, resulting from the “soft” retail real estate market. That said, this emerging trend represents a more permanent shift towards non-traditional uses of retail space.
Smart investors will keep a close eye on the pop-up trend and pop-up opportunities in their local market—after all, experience shows us that these “temporary” stores can often translate into long-term profits for landlords.
To learn more about how CRESCO, Greater Cleveland’s leading commercial real estate company, can help you with your property needs, contact us at 216.520.1200, or fill out the form below. A CRESCO professional will contact you shortly.