Retail leasing is typically viewed as a long-term commitment. After all, these deals take a great amount of work, and all parties must come to the table confident this will be a mutually beneficial relationship for years to come. Fast fashion and foodie trends may change, but the long-term viability of shopping center owners and tenants is dependent on their ability to both adapt and stay the course.
Like everything else in business, however, balance is key. Expand too fast and a retailer risks alienating customers. Sign today’s trendiest tenants to 10-year leases and a shopping center owner may find he’s the one in No Man’s Land seven years from now.
Today’s solution for tomorrow’s success is a short-term strategy that has longevity. It’s based on pop-up shops and programming that keep a center fresh, introduce expanding concepts to new markets and compel consumers to come back for more.
“Temporary retail stores can be a way for brands to test new products or connect with new demographics in ways they couldn’t before,” says Lori McGhee, group director of specialty leasing for Taubman in Bloomfield Hills, Mich. “Today’s consumer seeks out unique and specialized experiences, so pop-ups can offer something truly special by introducing shoppers to emerging brands and promising designers. Ultimately, it’s a win-win for both the merchant and customer.”
This strategy has proven successful for a variety of retail, restaurant and entertainment concepts. Luxury bedding manufacturer Boll & Branch operated online-only for three years before launching an experiential store at The Mall at Short Hills in New Jersey, about 23 miles west of Manhattan, in 2017. The space didn’t carry any merchandise, but its showroom included three beds adorned with the company’s latest offerings, in addition to fabric swaths that allowed consumers to test the softness of the sheets before buying.
“Boll & Branch launched its first experiential store to educate customers beyond the brand’s online presence and to strengthen the multi-platform retail concept,” McGhee explains. “We are currently in discussions to renew this concept as they continue to grow their brand.”
McGhee notes other companies have experienced similar success, with popular indoor cycling company Peloton debuting at Taubman’s Cherry Creek Shopping Center in Denver as a short-term tenant to test the market, while American Girl introduced temporary boutiques at Taubman’s centers during this past holiday season.
“Based on positive sales and favorable consumer reaction, Peloton transitioned into a permanent in-line tenant at Cherry Creek,” McGhee notes. “The American Girl brand wanted to appeal to more customers, especially during the holiday shopping season. The concept was hugely successful and popular with our shoppers at Twelve Oaks in Novi, Michigan, and City Creek Center in Salt Lake City.”
Pop-ups can work equally as well for owners, even if the concepts don’t (or were never meant to) turn into permanent fixtures.
“I had a 5,600-square-foot restaurant vacancy in a shopping center in West Hollywood,” says Gabe Kadosh, vice president in Colliers International’s Downtown Los Angeles office. “We had challenges leasing this size space to a full-service restaurant operator due to many factors, including increased labor costs.”
Time ticked on and the space sat vacant until a temporary concept was introduced. With costs mounting, you might even say this space was saved by the bell. Literally.
“I ultimately found a hybrid- pop-up restaurant to lease the space,” Kadosh continues. “It was a two-year lease to a group that would turn the space into a diner based on the ‘90s television show ‘Saved By the Bell.’ The restaurant, which was used in the show, was called ‘The Max,’ so this concept is ‘Saved By the Max.’”
The restaurant and throwback experience requires a ticket for entry. Saved By the Max pre-sold nine months’ worth of reservations before the experience even opened on May 1, lowering the amount of upfront capital required.
“Investors in Saved By the Max held a similar one-year pop-up dining experience in Chicago and it was a huge success,” Kadosh says. “The landlord was thrilled, as this deal generated national news.”
From a globally recognized doll to the latest in luxury bedding and a throwback every Gen X’er can appreciate, it’s clear today’s retail environment does not require a long-term commitment to experience stable success.
This article originally appeared in the Retail Insight newsletter by Shopping Center Business. This is a six-week publication created in conjunction with our content partners, which sponsor the newsletter, leading up to ICSC RECon and including post-conference coverage. Click here to subscribe.