Most Recent Articles In Real Estate
Latest Real Estate Articles
- Developer: Time to Rethink Shopping Malls
- Swire, Simon, Whitman in Miami Venture
- Monaco Tops List of Most Expensive Cities
More Articles By
NEW YORK — Temporary retail space was once considered the unfortunate stepchild of the real estate world. Landlords were loathe to do short-term deals when there were plenty of creditworthy tenants willing to sign five- and 10-year leases. Brokers weren’t fond of the abbreviated leases, either, complaining the deals required a lot of work for little payoff.
Not any longer. With the economy ailing, consumers cutting spending, retailers opening fewer stores and vacant space staying empty longer, temporary stores are taking on a new luster.
Short-term leases can be a stop-gap measure for property owners until a long-term tenant is found. Temporary stores allow retailers to test-drive a market without the commitment and expense of a multiyear lease. “To me it’s inconceivable that an owner would leave stores empty,” said Steve Tarter, a principal at Tarter Stats Realty. “If I can keep an owner’s cash flow going for two days or two months,” it’s worth it.
A popular use of temporary retail space is the pop-up shop, which allows a brand to make a quick splash in a market. While the life of a pop-up shop may be brief, its impact on consumers can be lasting. Pop-up shops often materialize in unexpected locations, such as Yves Saint Laurent’s shop for Stefano Pilati’s Edition collection, which opened in February on Manhattan’s scruffy Great Jones Street.
“Landlords are a little more apt to look at [pop-ups] creatively,” said Jeffrey Roseman, executive vice president and principal of Newmark New Spectrum, who worked on the deal for J.C. Penney’s 15,000-square-foot pop-up shop at 1 Times Square in 2006. “They had a big coming out party,” Roseman said. “Penney’s doesn’t have a store in Manhattan. They did a great job.”
Roseman said temporary stores are “geared for companies that are sticking their toe in the water and thinking about coming to New York. It’s like playing Off Broadway before Broadway. You have a chance to get the kinks out.”
A few years ago, the rule of thumb for short-term rent was 50 percent of the long-term rate. “It became so popular over the last two years that the rates are basically the same as normal long-term rates,” Tarter said. “The going rate in SoHo, for example, is $1,000 a day.”
Magaschoni, which is exploring retail opportunities, made its first move with a pop-up store that bowed in Southampton, N.Y., in April. “We’ve been thinking of maybe opening our own retail stores in an effort to promote the brand,” said president Monica Belag Forman.
Earlier this month, Loeffler Randall rented a temporary space for a sample sale at 525 Broadway at Spring Street. Italian men’s wear brand Isaia is working on a pop-up store and Shanghai Tang will soon unveil a pop-up unit in SoHo. Meanwhile, a Sunglass Hut at 620 Fifth Avenue became a pop-up venue for Prada from April 29 to May 5. The Italian fashion house showcased special edition sunglasses as well as its spring collection. Sunglass Hut is owned by Luxottica, Prada’s eyewear licensee.
Pop-ups also have been opening within existing stores, an arrangement that exposes customers to a new visiting brand and gives the store a different point of view. That was the idea behind DecadesTwo’s recent pop-up shop at Kiki de Montparnasse on Greene Street in SoHo.
Scott Hahn, co-founder of Loomstate, teamed up with Jill Platner for a pop-up store on Crosby Street featuring limited edition baubles and organic T-shirts. A series of Loomstate pop-up events will be held this summer at August in Oakland, Calif., and Chicago. Last week, an event at Chicago’s Apartment Number 9 offered custom Loomstate T-shirts and Van’s eco shoes.
“Loomstate is taking ownership of space inside another retail setting,” Hahn said. “It’s kind of like a consignment relationship. Independent stores and boutiques are having trouble accessing credit and capital to get new inventory on store shelves. I tell them, ‘We’ve got inventory and you’ve got real estate.’ We’re joining forces with them to bring energy to the community and the brand.”
Target has been particularly adept in its use of pop-up shops, with the most recent being an 8,500-square-foot unit in Chicago earlier this month called Bullseye Bazaar. “We credit ourselves for pioneering [pop-ups],” said Joshua Thomas, a Target spokesman, who said the company has done 13 or 14 of them since 2002. “Each pop-up has a new layer to it. The Target Bodega in New York City had four different locations. Luella Bartley’s pop-up was a double decker bus store. They’ve been extremely successful. Pop-ups are primarily a buzz marketing tool.”