close icon

Expert opinions, profiles, market trends, debate and the latest news in an ever-changing sector

Retail Wednesday 22nd April 2015

Pop-ups here to stay?

Pop-ups here to stay?

Lettings to 'pop-up' shops helped many landlords mitigate the effect of voids and rate liabilities through the recession. But what's the future for them now that the market is improving?

‘Pop-up shops’ feel like a very 21st century trend along with ‘flash mobs’ and adverts ‘going viral’.

Cynics in the retail property business might argue that ‘pop-ups’ have been with us for decades.

As Nick Morgan of Kitchen LeFrenais Morgan observes: “’Pop-up’ is just a fancy name for temporary lettings.

“We do a lot of temporary lettings and always have. A substantial proportion of lettings in many shopping centres are temporary with a six-month rolling break.”

Temporary lettings ‘keep the lights’ on in vacant shops, mitigate the rates, insurance and service charge liabilities and, of course, there is always the hope that the tenant might make a success of it and stay.

The burden of business rates has undoubtedly been a driver behind the pop-up phenomenon. If a pop-up retailer occupies a property for six weeks, the landlord gets another three months’ relief from paying empty rates.

It will be interesting to see if a better lettings environment and the Government’s attempts to redress the business rates balance will lessen this.

It certainly feels like landlords may now be in a position to get more selective about pop-up lettings.

“We’ll only use it when it is something genuinely new and interesting,” says regional director Martin Breeden of shopping centre giant, intu.

Several pop-ups have appeared at the Broadmarsh centre in Nottingham which is awaiting a revamp and intu has also used pop-ups at the Lakeside shopping centre in Thurrock, where street clothing brand Ratchet has been successful and vacuum cleaner maker, Dyson used a pop-up to explain some of its technology.

“We use it to add to the retail mix, and there are always high standards of fit-out,” says Breeden.

What often gets forgotten in the pop-up debate is that there are actually two very distinct strands of the sector. There are lettings to pop-up shops and there is also the creation of pop-up developments – semi-permanent projects that can act as income-producing catalysts which also help establish a location as a retailing destination.

The way people buy and sell is changing and nowadays businesses want to create a story, a channel and an app

Boxpark in London’s hip Shoreditch was the first substantial scheme of this nature. The brainchild of retail brand visionary, Roger Wade, the scheme opened in 2011 with the claim that it was the world’s first pop-up shopping mall. Constructed of refitted shipping containers, the units created low-cost, low-risk pop-up stores and is filled with a mix of fashion and lifestyle brands, galleries, cafés and restaurants .

As Boxpark approaches the end of its envisaged four-year life span, its lead has been followed – although too closely in one instance. A legal action is now believed to be underway regarding the alleged appropriation of the Boxpark name by a scheme in Dubai.

Back in the UK, one of the most interesting new semi-permanent projects is Pop Brixton – a development which is being constructed at the corner of Brixton Station Road and Pope’s Road in London SW9. Like Boxpark, the Carl Turner- Architects designed scheme, is using recycled and adapted shipping containers but it also includes entertainment space, serviced offices, a 10-bedroom micro-hotel and a number of live-work units.

Jamie Mackenzie of the project’s letting agents, Goodsir Commercial, reports: “Pop Brixton is entirely ‘meanwhile space’ which is available until Lambeth council can redevelop the site in about three years’ time”.

“It is intended to help local businesses and start-ups, young businesses and people from the local area who are perhaps selling from a market stall at the moment.”

Goodsir Commercial has offers on all the units but not all of them are from ‘first timers’. Mackenzie reports: “Some offers are from people who wouldn’t normally consider pop-up but are doing so because there is simply not enough retail space in Brixton”.

The Pop Brixton line-up is now being finalised ahead of its opening in June and its offer looks likely to encompass fashion, food, bars, jewellers and hairdressers.

Ultimately, it might be these catalyst schemes that provide the pop-up phenomenon’s most lasting legacy but for the present, such has been the proliferation of the temporary trend, it has spawned permanent businesses to serve it.

To capitalise on the Queens’ Diamond Jubilee in 2012, Ross Bailey was selling T-shirts from a pop-up shop near Carnaby Street when he had his lightbulb moment. While stock sold from Rock & Rule’s temporary shelving, Bailey was also fielding enquiries about his premises from other would-be shop keepers and he realised that the property aspect of pop-ups might be the real opportunity.

This belief gave birth to Appear Here, an agency that, using hotel booking-type technology, matches temporary retail needs with temporarily available space. Having launched in 2013 with one employee, Bailey now has what feels like a very permanent 30-strong headcount.

He observes: “The way people buy and sell is changing and nowadays businesses want to create a story, a channel and an app.

“Three retailers that have launched stores on TV’s Dragon’s Den have used Appear Here units.”

While there may be a continued role for an agency-like function to match the permanent churn of vacant space with the temporary needs of new and established retailers, the stark reality is that landlords will always choose longer term, secure income ahead of temporary pop-up lettings.

However, they may be well advised to look more closely at the retailing trends that can power pop-ups.

For example, in the US, shoppers spend more than $8bn dollars on Halloween outfits, sweets and décor. This has bred retailers like Spirit Halloween which operates more than 1,000 pop-up stores for an eight-week selling season each year and has turnover in excess of $100m annually.

What often gets forgotten in the pop-up debate is that there are actually two very distinct strands of the sector

For landlords they offer a sophisticated, secure source of income on a permanent/temporary basis each year. The number of Halloween pop-up stores has grown steadily at a rate of 8% a year since 2005.

Spirit Halloween report that sourcing space is becoming challenging and that the general leasing environment has become more positive. Interestingly, they now see themselves as having to compete with occupiers who are prepared to take space for as long as…one whole year.

A pop-up sign of things to come here?