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Will Pop-Ups Keep Popping Up?

National Retail
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Pop-up shops have been around for years, mostly in the form of Halloween costume shops or holiday concepts. 

CBRE Research predicts pop-up shops and other temporary concepts, a term CBRE calls rogue retailers, will be one of the biggest shopping trends this holiday season. Both the retailer and landlord benefit from temporary, independent and craft store concepts, but that doesn't make the concepts foolproof.

Retailer benefits of pop-up shops seem obvious. The retailer gets to test and experiment in a market without committing, CBRE head of retail research for the Americas Melina Cordero (above) says. The shops are generally cheap to set up because they don't require outfitting an entire space. 

And best of all, if it doesn't work out, the retailer can walk away with minimal detriment to itself or the landlord, Melina says.

As for landlords, pop-ups require a bit more screening. If a landlord spends just as much time procuring a long-term tenant as he does procuring a pop-up tenant who pays about 7% to 9% of sales for, say, 90 days, it could be a waste of time. Only having space filled short term isn't something investors and boards want to hear, Melina says. 

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But empty space doesn't earn revenue either, CBRE regional retail leader Daniel Taylor (above) says. A landlord may chase a big-box retailer for a year or two before inking a deal. Pop-ups can be a great way to fill the space and earn a little cash in the meantime, he says.

Big landlords who lean towards long-term tenants only recently started warming to short-term tenants, Melina says. Food trucks and temporary tenants with an experiential component (such as Gilmore Girls-inspired pop-up coffee shops) have showed traditional landlords the value in bringing short-term tenants to a center.

Empirical data is still hard to come by, Melina says. Deal structure works a little differently for short-term leases and most retailers keep such data to themselves.

But the proof is in the pudding for centers that keep bringing in the pop-ups, Daniel says. Highland Park Village in Dallas has seen a lot of success with various concepts and even big-name retailers such as American Girl, which launched pop-ups this season in Pennsylvania.