News and Events
National Chains Have Adapted the Temporary Store Strategy, but it’s Getting Harder to Execute
What was once a niche business dominated by seasonal retailers became an overarching strategy for many retailers nationwide.
Jul 9, 2011 Retail Traffic Elaine Misonzhnik
With the second half of the year under way, tenant representatives and landlords are starting the heavy lifting on temporary leasing negotiations—a side of the business that prospered during the downturn.
What was once a niche business dominated by seasonal retailers became an overarching strategy for many merchants. Some tenants took advantage of high vacancy rates to use temporary sites as test locations for future permanent stores. Others opened more traditional pop-ups, which are often marketing stunts that operate for as little as a few days before shutting down. And some explored the strategy as a way of capitalizing on the holiday shopping season without committing to a year-round location. With vacancy rates in all retail segments at or near all-time highs, landlords were eager to oblige.
In the process, the distinction between traditional seasonal tenants and pop-ups got blurred, in no small part due to the way the industry itself discussed the trend. For example, last year when Toys ‘R’ Us announced plans to open more than 600 temporary stores for the holiday shopping season, it referred to them as “pop-ups.”
Toy’s ‘R’ Us converted some of its holiday Express stores from last year into permanent locations.
But as retail occupancy rates—predominantly in primary markets—are recovering and retailers themselves are increasing their pace of expansion, the temporary leasing tide is shifting back to its traditional ebb and flow.
“It’s an easy thing to do when there is so much vacant space there, but I see less of it, especially in the better markets, because there is less vacant space,” says Spence J. Mehl, senior vice president with RCS Real Estate Advisors, a New York City-based retail real estate consulting firm. “In some of the harder hit areas, the retailers are still using pop-ups to kind of get in and out of markets where they don’t [want] to sit throughout the whole year.”