Investing Assets & Markets Real Estate Investing Pop-Up Shops: A Short-Term Solution to Vacancies By Nellie Day Nellie Day Twitter Nellie Day has been working in the commercial real estate industry for over 10 years. She is a freelance writer for a number of regional, national, and international publications, and serves as a marketing and PR consultant for real estate firms. learn about our editorial policies Updated on September 19, 2022 Fact checked by Mrinalini Krishna In This Article View All In This Article Sharp Marketers Use Pop-Ups to Sell Their Wares The Length of Leases and Other Considerations The Pros and Cons for Landlords When to Start Your Pop-Up Leasing Search Frequently Asked Questions (FAQs) Photo: Lucy Lambriex / Getty Images Landlords and their leasing agents must get creative and think out of the box when retail space remains vacant for too long. Not only does this empty space strain the property owner, but it creates an eyesore in the community. An easy way to remedy both problems is to lease the space out on a short-term basis. There are plenty of businesses that lend themselves to these kinds of temporary occupancy. You many notice an H&R Block store suddenly pop-up two to three months in advance of tax day. But accountants aren't the only ones in need of temporary retail space. Holiday shops, mobile art exhibits, start-up designers, and well-known retailers with excessive merchandise also want to operate pop-up shops. Key Takeaways Pop-up leases are short-term agreements versus traditional long-term business leasesPop-up rents may be less expensive by up to 50% compared to traditional leasesAdvantage of pop-leases for landlords include use of their vacant premises and a stream of rentDisadvantages of pop-up leases include less rent, tenant churn and regulations Sharp Marketers Use Pop-Ups to Sell Their Wares Some sharp marketers who have new products, or a completely new business, will also lease short-term space specifically to test their products or new business concept to determine if it will, in fact, sell in a particular market, or city. If any of these products or businesses are susceptible to localized influences, the marketers may lease space in multiple markets to make sure they cover their entire demographic. In fact, the pop-up retail space market has become so popular with both landlords and tenants that there are multiple sites on the Web catering to landlords who want to list properties as well as those tenants searching for the right opportunity. One such popular website is TheStorefront, which even lets the tenant book the property online. The Length of Leases and Other Considerations Pop-up shop leases usually last between six weeks and a year, with many non-seasonal retailers willing to sign month-to-month leases that could result in long-term tenancy. Note Rents for pop-up shops can be less expensive compared to traditional leases by as much as 50%. Of course, this concept works best when there is little or no space modification necessary. Generally, just adding desks and chairs or some kind of display shelving or fixtures is all that's required. And, these simple additions/changes can be easily implemented or erected and then torn down. Modifications are usually not a stumbling block because the tenant wants an easy move-in/move-out phase, and the landlord wants little or no refit between tenants. The Pros and Cons for Landlords Pros Some rent better than no rent Government incentives Attraction of pop-up to the location Short-term lease Cons Less rent Short term lease Regulations and Licenses Additions and improvements Pros Explained Rent: While a long-term lease commitment is ideal, a pop-up operation is not entirely unattractive to landlords. That's because the prospect of bringing in some rent is better than no rent at all. Incentives: Some local governments or organizations may provide incentives to businesses to rent to pop-up stores. For example, NYC non-profit ChaShaMa provided three months rent for businesses, a model that was considered by other local governments while contemplating their own strategies for promoting pop-ups.Attraction: The aesthetic value that a bustling pop-up operation can add to a location should also not be overlooked. It can only help consumer confidence and show off the retail space as being desirable. Short-term lease: The short length of these leases can also be a huge benefit to landlords by providing immediate mortgage assistance while leaving prospects open for long-term leasers once the market (even a hyper-localized one) becomes more favorable. Cons Explained Less rent: While pop-ups bring in some rent, it is definitely less than what a traditional lease would yield. If you're depending on the rent to make other substantial payments such as mortgage, it may not be enough.Short-term lease: Short-term leases provide flexibility to both tenants and landlords. However, it could also leave with little time for landlords to create a pipeline of subsequent tenants.Regulations and licenses: You'll have to ensure that your property is zoned correctly for permitted use to the type of pop-up business you're leasing to. Also, you'll need to ensure the prospective tenants provide all paperwork, including relevant licenses and permits before you lease. Getting all documents in order in a short-period for short-term leases may be challenging.Additions and improvements: While pop-ups don't necessarily need too many modifications of space, but you should contractually agree with the tenants on what modifications they can make to your space. When to Start Your Pop-Up Leasing Search Summer is the ideal season to focus on leasing vacancies because costume shops, holiday decoration stores, and gourmet food and gift basket providers are in need of space for the upcoming holiday season. Frequently Asked Questions (FAQs) How do you lease a pop-up spot? As a business owner, you can get in touch with your local authorities or list your property with platforms such as storefront. But before you do that, make sure your space is zoned correctly for business operations for businesses you're looking to enter into short-term leases with. What is the rent of a pop-up store versus a regular lease? Pop-up stores, typically, have short-term leases as opposed to regular leases that businesses enter into for the long-term. Rents for pop-up stores are less expensive compared to traditional leases, sometimes by up to 50% of the regular lease value. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Storefront. "Find Your Space." City of Richmond, Kentucky. "Downtown Strategic Vision Downtown Richmond, KY," Page 103. American Bar Association. "Pop-Up Leasing." Commonwealth of Massachusetts. "Storefront Activation - Rapid Recovery Program Toolkit," Page 20.