The trend is not new – around this time of year, it is commonplace to see empty storefronts being filled with pumpkins, superheroes, and pirates. As America’s second favorite holiday, and with an associated $9.1 billion predicted annual spending, it is not surprising that Halloween has created its very own industry. Retailers including discount stores and home improvement stores have tried to capture a piece of this seasonal spending.
In addition to the huge retail boost Halloween spending provides, the Halloween industry can provide a profitable solution for landlords. Recent closings and downsizings of many brick and mortar stores, particularly big-box stores such as HH Gregg and Kohl’s (read about how Amazon has affected retail space), have left many landlords with large vacancies in their centers. Enter pop-up shops focusing on Halloween costumes and decor! One of the key benefits of these seasonal stores is the flexibility with which they approach their spaces and therefore their ability to generate a temporary revenue stream for landlords from what would have otherwise been an empty space.
Here is what Spirit Halloween references as their ideal location:
“Spirit is ideally looking for temporary 3 MONTH leases that include a kick-out clause (should the landlord secure a permanent deal by June). Since Spirit locations open on or about Labor Day and remain open through November 1st, our ideal lease would run from August 1st through mid-November. To achieve this, we scour the country, making our site selections from January through August. We like to locate our stores in power centers, strip centers, free-standing stores, major downtown retail locations and in major malls surrounded by a national retailer mix. Our aim is to set up in communities that have 1) a population of approximately 35,000+, 2) living within a 3-5 mile radius, and 3) with a car count of at least 25,000 cars per day. Our flexibility is key! While our ideal locations feature between 5,000 to 50,000 square feet of sales floor space with awesome visibility, no store is too large (or too small). We can even adapt to a space with as little as 3,000 square feet.”
For tenants, the benefit of this model is obvious. Although the Halloween industry is huge, it only spans a few months, therefore a temporary lease allows them to capitalize on the market with very little overhead. At the same time, landlords benefit because the flexible site requirements mean that these Halloween pop-up shops fill a space and pay rent, while not locking the owner into a long-term lease at a low lease rate. Many landlords also like these pop-up shops because they generally do not require any tenant improvements. Landlords and nearby tenants also find that these stores drive traffic into their centers for the few months they are open, thus helping business of the surrounding tenants. During a time of uncertainty surrounding the trajectory of brick and mortar retail, Halloween pop-up shops give landlords a chance to generate income on a space while still leaving them room to figure out the best long-term solution.
REFERENCES:
http://levinmgt.com/blog/2014/10/halloween-stores-are-the-tip-of-the-pop-up-iceberg/
http://blog.thebrokerlist.com/pop-shops-cre/
https://www.bizjournals.com/albuquerque/news/2016/09/22/why-those-halloween-pop-up-stores-are-big-business.html
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