Halloween Pop-Up Stores Scare Up Short-Term Rentals

There’s really nothing tricky about Halloween pop-ups. They are short-term lease stores that appear a couple months before the holiday, selling the merchandise that shoppers need at this time of year especially. And just how much merchandise are those shoppers expected to buy this year? Prosper Insights & Analytics conducted a survey for the National Retail Federation that predicts total spending for Halloween in 2018 will reach $9 billion. That’s not only a treat for pop-up stores, but for landlords and property owners, too.

Pop-Up Stores Fill Vacancies

Landlords of malls and strip centers have become more receptive to pop-up stores of all kinds as Internet sales have forced some retail tenants to close. Most commercial real estate owners prefer to accept a temporary lease rather than not have any lease at all for vacated space. Furthermore, they know that Halloween pop-up stores will offer the public products they want—from costumes and decorations to candy and greeting cards—and provide an adequate return on their real estate investment. Especially for landlords that are betting on rental rates to rise, renting to a Halloween store is a way to make some money without getting locked in to a long-term lease at current prices.

Pop-ups Generate Traffic

Some high-end storeowners may not exactly love the idea of a Halloween pop-up store becoming a neighbor. However, most know that a landlord is not likely to do something that could harm a long-term tenant or devalue the character of their retail asset. Plus, they usually cannot argue with the increased traffic such temporary stores bring. And the fact that Halloween pop-ups are in place during the months leading up to the Christmas shopping season is a bonus, as well.

From Halloween to Christmas

Pop-up stores aren’t only for Halloween shopping, of course. Temporary toyshops are ideal tenants before the holiday season. And this year there is an even better reason for landlords to welcome these kinds of temporary tenants: the closing of Toys ‘R’ Us stores across the country.

In a front-page article in The Wall Street Journal on October 8, 2018, the headline read, “Retailers Dash to Fill Void Left by Toys ‘R’ Us Collapse.”

In addition to WalMart, Target and other chains that are assigning more square footage to toys, other retailers are parlaying success with Halloween pop-ups into dollars from toy sales.

Party City, for example, is pairing its Halloween City with Toy City. A few days after October 31^st, the aisles of costumes will be replaced with toys. According to the article, there are 54 Toy City locations planned around the United States. In the Dallas-Fort Worth Metroplex, a Halloween City and Toy City combo-pack is located at Firewheel Town Center Mall in Garland.

There is a difference between a pop-up for Halloween and one for Christmas. Halloween merchandise tends not to go out of style. Yes, popular costumes this season may not be in the #1 spot next year. However, there is merchandise that tends not to go out of style—think ghosts, goblins, witches and zombies. All of these can be stored and reappear on shelves next Halloween.

For a temporary Christmas store, on the other hand, the intent is to have this season’s most sought after toys and sell out. In the toy business, what’s hot this year could be a faint memory during the next Christmas shopping season. Therefore, by the time these pop-ups close in early January, the shelves will hopefully be empty.

A Pop-Up for All Seasons

Pop-up stores aren’t just for Halloween and Christmas. More and more shopping centers have dedicated space to short-term retailers. Fort Worth-based Trademark Property Co. even has a designated leasing agent specifically for pop-up tenants in their various centers.

For retailers, pop-ups are a great way to launch products, test new markets, connect with customers, and build awareness at a fraction of the cost for a longer lease on a physical retail location. Ecommerce brands in particular often use pop-ups to interact with customers and gauge the value of a brick-and-mortar presence.

How long are pop-ups open? However long they need to be open. Some are around for a day—just long enough to stage an event or launch a new product with the objective of getting great PR and brand awareness. Others are open for several weeks, months or even a year.

The latest iteration of pop-ups is appearing in department stores—a store in a store. For example, The Market@Macy’s launched earlier this year at several Macy’s locations across the country. The concept gives brands exposure and helps Macy’s stay relevant with shoppers and glean insights into customer preferences. Brands rent space for one to three months on the first floor. Macy’s employees staff the pop-up and the brand keeps sales revenue.

All in all, with the increased number of pop-up stores taking vacant spaces and creating a rental stream, landlords will experience an additional year-end financial treat.

 

The information contained in this article is general in nature and should not be construed as financial, tax or legal advice.  As with any financial or legal matter, consult your tax advisor and legal counsel.