Pop-Up Retail: The Norm For Commercial Real Estate After COVID-19

Pop-Up Retail

As businesses continue to struggle as we enter into a new year, many are looking for new ways to survive amid the COVID-19 pandemic. Retailers who operate out of brick-and-mortar stores in particular are concerned that commercial real estate will be crippled by the impact of the pandemic. Because of this, many have turned to pop-up retail options in order to maintain their physical storefronts as online sales soar.

What is Pop-Up Retail?

Pop-up retail or a pop-up shop is a term given to the storefront of a retailer that is deliberately temporary. Essentially, it is a store that “pops up” for a limited period of time – most often seasonally. While this particular means of retail was rising in popularity prior to the pandemic, it has grown exponentially ever since early last year as a means for struggling businesses to maintain an affordable and safe brick-and-mortar space.

Pop-up retailers can look like the average storefront; however, many businesses utilize them to create a more unique and engaging shopping experience, as they allow for the flexibility to experiment with less risk than they would have under a traditional lease.  In fact, many brands have run traveling pop-up shops, moving shops from location to location.

Pop-Up Retail and Commercial Real Estate

There has been an undeniable shift in retail towards online shopping since the COVID-19 pandemic began its spread last March. In fact, according to the U.S. Department of Commerce, quarterly figures show a 30% increase in online sales between Q1 and Q2 of 2020 alone.  This shift towards a more online-focused shopping experience has affected brick-and-mortar retail establishments throughout the various lockdowns and capacity restrictions. While some retailers have opted to vacate their stores entirely for online sales, others are concerned that this change will have a massive effect on commercial real estate unless they adapt. One potential solution is opting for increased seasonal pop-up retail offerings and/or shorter lease terms.

While both landlords and retailers have found themselves in difficult situations throughout the pandemic, opting for alternative leases and packages on spaces that are ready-to-use could be a solution. In New York City, for example, Rockefeller Center’s landlord has developed a six-month leasing program that offers turnkey commercial space for business owners called RC Capsule. According to the landlord, this system provides brands without a physical presence in Manhattan with a space to take up residence, “for six months at a time, introducing them to city goers right in the middle of Rock Center’s well-established retail experience.”

The Benefits of Pop-Up Retail

While not an entirely new concept, pop-up retail can be incredibly beneficial for consumers, retailers, and landlords alike. In most cases, these temporary storefronts are placed in areas with high foot traffic, making them a valid means to increase sales. For consumers, this means having a wider variety of retailers to choose from in one area, as well as having the opportunity to explore new brands and products. In turn, this allows retailers to experiment with new products, reach new clientele, and gather insight into how they can better target customers.

While pop-up retail has obvious benefits for both consumers and business owners, landlords are not left behind. Having a pop-up space allows landlords to temporarily fill vacant storefronts that would otherwise be empty as they wait for long-term tenants – a major concern amid the pandemic. Additionally, having temporary storefronts can create buzz for the property as a whole, which can generate even more pop-up shops from other short-term tenants and shorter-term leases.

Houston Real Estate Attorneys

Despite the potential popularity of pop-up retail, this increase in development of temporary storefronts will necessitate new and novel commercial real estate transactions, and in some cases these agreements could unfortunately lead to the need for real estate litigation. At Feldman & Feldman, our experienced real estate attorneys have handled business transactions and commercial litigation involving all types of real estate activities that occur during acquisition, development, and sales. If you are facing a real estate dispute, our attorneys can help to reach a successful outcome. Contact us today for more information on how we can best assist your business.