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May 28, 2010
In today's retail market, shoppers have more of an opportunity than ever to find a variety of items at great prices, and are being more demanding as they spend less. This has created increased competition among retailers, resulting in new innovations in how retailers create opportunities to attract consumers. One of these innovations sweeping commercial real estate is pop-up retail.
Pop-up retail is a space that is occupied by a tenant for a short period of time. It has evolved due to the economic hardships felt throughout most major U.S. markets. Commercial real estate is dealing with all-time-record high vacancy rates along with rental rate lows that haven't been seen in years. The combination of these variables has created significant challenges for major malls and shopping centers in filling space and generating revenue. Landlords that were once able to demand ten year leases are now faced with a ten day lease or no lease at all. In some cases, a pop-up space user may be the answer. A user may be a one night event occupying a unique space. But for most retailers, it is becoming a great opportunity to test new ideas and give consumers more choices with very little risk over a short period of time.
Pop-up retail is no longer just for Halloween shops and Christmas stores. Major retailers such as Target and Toys "R" Us have joined the many entrepreneurs of new business concepts out there ready to make an impact. In May of 2009, Target opened up a three-day shop on Chicago's Magnificent Mile featuring new fashion lines from the retailer. During the 2009 holiday season, Toys "R" Us unveiled their Holiday Express store concept across the country, and plans to repeat the experiment this year. Luxury retailers are even taking advantage of the opportunities: Louis Vuitton and Chanel have opened pop-up shops from New York to Tokyo.
Websites like popupinsider.com have created an online resource for available pop-up space. Time will tell if pop-up retail is a trend or is here to stay, but for now it is an innovative opportunity for all sides of commercial real estate to make the most of a down economy. Pop-ups are here now; get them before they're gone!