Do Pop-Up Stores Make for Good Tenants?

NEW YORK (MainStreet) -- With Halloween just around the corner, the holiday season has begun. With it comes the holiday pop-up store, which experts say make for good tenants, especially in a down economy.

The temporary stores have most commonly opened for one to three months to sell seasonal merchandise from Halloween to Christmas. Over the past few years, especially during the 2008-09 recession, the appeal of pop-up stores broadened to a wider tenant base, including large and small apparel retailers, fashion designers and other entrepreneurs perhaps looking to test the waters for a line of merchandise.

An IBISWorld analyst estimates that 1,600 pop-up stores will have opened in the U.S. for Halloween this year, but that's only a hint of the impact of the temporary stores.

The recent Target(TGT) pop-up shop in midtown Manhattan -- in which the store's Missoni merchandise was so popular it had to close the shop after one day -- is a clear indication of the value and potential conflict of these temporary stores.

TechCrunch reported last week that eBay's(EBAY) PayPal is looking to open a store in downtown Manhattan to showcase some of the tools and technologies the payments company is getting ready to debut. The store is expected to launch Nov. 1 and stay open until mid-February.

More mainstream use of pop-ups by consumer product firms creates "a tremendous opportunity for landlords," says John Nolan of Core Marketing. "The savvy leasing agent will work in conjunction with the pop-up store team to ensure that potential future tenants and agents are at the [launch]. If used properly the pop-up becomes a marketing vehicle for the retailer and offers a great halo effect for the landlord."

Yet it is a challenge to educate landlords on the value of allowing short-term tenants, according to Christina Norsig, CEO of PopUpInsider, an online exchange and blog for temporary real estate.

"I think there is a fear from many landlords that once they commit to a temporary tenant that they won't be able to associate a long-term lease" with the space, Norsig says.

What's more likely is that as the landlord looks for permanent renters, a temporary business will offer the landlord extra revenue and "make the property look better," accelerating the rental process, she says.