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So get in the Loop (the loop is good)


Landlords shouldn’t miss the point about pop up shops (or the opportunities)…


There’s no doubt that the high number of failed retailers and vacant shops has been devastating for many shopping precincts – but ironically that has been good for the growth of our “pop up shop” industry. The wider choice of vacant spaces – and negotiable terms – has allowed many businesses to pop into areas which are otherwise not available or affordable. And when the pop ups succeed (even in short visits), their success can be good for others too.

Not all vacant shops are offered (or suitable) for short-term leases – and there’s still a general reservation (suspicion ?) amongst many commercial agents / landlords about pop up shops and any benefit they may provide.  Over the past year or so I’ve seen a mellowing of attitudes towards short-term tenants, as some agents and owners look at the options and potential of allowing “temporary retail”. Under the right conditions a short term tenancy can provide good results – the shop opens and customers visit again (showing potential long-term tenants that the space does work), the new tenant may clean up the building and graffiti – and the surrounding traders usually also benefit from increased foot traffic (the precinct as a whole is brightened, albeit briefly). And all this happens while the agent is still touting for a nice long-term tenant…

Short-term leases are not going to be a long-term solution for our suffering retail precincts – but they can certainly offer positive experiences in the interim. I sometimes talk about the win-win-win of pop up shopping – for the businesses who takes up an opportunity to launch, sell or promote their range… the neighbouring traders… and for the landlord who awakens their property, pockets some rent – and promotes the location in a new and engaging way. Although pop ups are temporary, they can certainly be good for the local precinct and economy.

The blog pages of the Australian Gift & Homewares Association ran an article last month which declared that “pop up shops are detrimental to most existing retailers”. The author of Just Another Loopy Idea (a wholesaler) had suggested “that landlords keep pushing up rents (and…) occupancy costs are becoming unsustainable”. The author went on to say that “Landlords should be compelled to sign leases… say for at least 12 months and there should be no monthly or temporary leases… So the shop stays empty and this forces the landlords to negotiate…In fact by keeping empty shops empty it would be a clear indicator to prospective tenants of the stronger bargaining position they have towards more realistic rentals”.

Um… keeping shops empty as a strategy ?

Doesn’t a forest of vacant shops have a detrimental impact  – not just in discouraging prospective tenants but also for the surrounding businesses ? Previously I’ve suggested that if “success breeds success” surely the flip side might also be true…“failure leads to further failure” (global initiative, local application)….”Shop vacancies continue to rise as the impact of the GFC sees traders close their doors and no-one comes along to fill the space – leading to a forest of For Lease signs along once-vibrant shopping streets…This creates a mood of despair amongst communities (and the remaining traders) as shopping traffic declines and other businesses also leave the area… eventually leading to lonely, unloved and un-sightly high streets…”

The rents received for short term events are not necessarily the same as longer term leases – often we hear of landlords who have negotiated significantly lower rates with their temporary tenants. After all, some rent is better than none (especially after a long vacancy already) – and if it’s not signed into a long lease there’s still hope for the agent to negotiate a better rate with other, more permanent tenants. There may also be a trade-off with the temporary tenant – such as a clean up around the premises, a bit of demolition or a new coat of paint inside the shop. Or there could be a genuine expectation that the “popper” just needs the opportunity to make a go of it and may actually come along to sign up a longer lease – and so the landlord takes the attitude of subsidizing an informal “trial period”. I’d argue the greatest benefit though, is that the shop is open and trading again. As I’ve said before… the lights are on, activity (and traffic) returns to a lonely and un-loved street.

The point about pop up shops is that they do offer opportunities. Not just for the “popper” (who, by-the-way, should be encouraged and congratulated for “having a go”) but also for the neighbouring traders and the landlords. Pop up shops are not a “loopy idea” at all. In fact they can form part of a greater loop – playing a valid role in re-invigorating retail precincts and supporting local economies – benefitting many more than just the temporary tenant…


Featured image : – Google Images


One comment to "So get in the Loop (the loop is good)"

  1. Greg 08/10/2013

    The other benefit to landlords is that the ‘pop up’ might be testing the market in that area, and if a pop up works, then the temporary lease may lead to a permanent one. My wife is in the process of signing a permanent lease at a site where she has run two ‘pop ups’ in the last 8 months


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