Are pop-up shops becoming a permanent fixture?

Pop-up shops are getting access to some of the best storefronts in New York City under so-called licensing deals, with a lot less hassle than a regular retailer faces.

Stable long-term retail tenants are hard to come by in Manhattan as the market continues to soften, and the real estate industry is adapting to short-term tenancies as much as long-term ones. Additionally, many pop-ups come with celebrity backing, from Gwyneth Paltrow to Kanye West, which can help landlords promote their properties.

A pop-up tenancy, which by most industry definitions lasts from one day to one year, can be extremely attractive to both parties — a landlord monetizes the space and remains open for a long-term lease, and the tenant gets visibility in the high-profile New York market with relatively little long-term risk.

As The Real Deal reported in December, pop-ups are typically seen as a stopgap measure that landlords and brokers can use while they wait to secure more permanent tenants. But some industry players say they will become increasingly commonplace as building owners look for new ways to minimize losses and retain tenancies in the ongoing shift from brick-and-mortar retail to e-commerce.

Online sales currently make up less than 15 percent of all retail sales in the U.S., but by 2025 roughly one in every four purchases will be made online, according to a November 2016 report from the global advisory firm FTI Consulting. Retailers themselves have become increasingly wary about signing long-term deals in such a rapidly accelerating environment, Winick Realty Group broker Kelly Gedinsky said.

“Things change so drastically these days, it’s harder for retailers to consider a long-term deal,” she noted. “Unlike five years ago, landlords are more open to pop-ups because so many [potential tenants] are coming to them and their brokers saying, ‘Look, we want to test this market for a year. If it works, we’d be happy to look into a longer-term deal.’”

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THE REAL DEAL_080217_Are pop-up shops becoming a permanent fixture

Winick Realty Group is one of New York’s prominent real estate firms specializing in retail leasing and advisory services.  Over the years, Winick Realty has served a broad range of domestic and global clients, with a strong emphasis on long-term representation and expansion and growth strategies.  Winick Realty Group is highly recognized as a forerunner in the retail real estate market.

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