Cleveland Real Estate: Power of the Pop-Up Store

There’s no doubt about it—from a commercial real estate perspective, 2019 will go down as the year of the pop-up. Traditionally, pop-up stores have been viewed a type of “placeholder” tenant; a consolation prize for landlords struggling to fill their retail spaces. 

It’s true that in decades past, pop-ups have been primarily comprised of seasonal retailers, such as Halloween costumes and Christmas decor. While the seasonal pop-up market is still growing, these types of spaces are no longer reserved solely for these retailers.

According to Cushman & Wakefield’s Pop-up-a-Palooza report, the rise in pop-up spaces across the U.S. represents an exciting reinvention of the retail market that just might be here for the long haul.

The Evolution of Pop-Up Store

Today, the pop-up arena is where we see some of the greatest innovation in the retail market. Startup brands, local entrepreneurs, global retailers, and even non-retail businesses have begun embracing pop-up locations as a valuable marketing and sales tool.

One of the most exciting pop-up trends on the horizon is the growing focus on experiential concepts. Brands are investing in unique, memorable experiences for customers as a means of building brand awareness, driving sales growth, or even reinventing their public image. These pop-ups often center around fun experiences like food and beverage, virtual reality, games, and photo-worthy backdrops or activities. 

Pop-ins—when a brand uses space within an existing retailer’s store—are one of the fastest-growing segments of the pop-up market. These mutually beneficial partnerships provides buzz and foot traffic for both the pop-in business and the host business. Department stores are leading the charge when it comes to hosting experiential pop-ins.

How Landlords Benefit from Pop-Up Spaces

One of the key benefits from an investment perspective is that these stores typically require almost zero long-term investment in tenant improvements from the landlords. Pop-ups are a reliable way of generating revenue from an otherwise-vacant property, while continuing to market the space to potential long-term tenants. 

Because of the short-term commitment, landlords are sometimes able to rent these spaces out to retailers at a premium—in some cases, as much as 50% above what would have been the going rate (according to an informal study by Cushman and Wakefield).

Additionally, pop-ups are increasingly being used as a trial run for businesses who may later rent the space on a long-term basis. Dozens of retailers, small and large, have opened pop-up stores and later converted them to permanent locations. As a landlord, staying open to these pop-up opportunities may yield long-term commitments (and income) in the end.

Noteworthy Cleveland Pop-Up Shops

One of the city’s biggest pop-ups in 2019 was the Cleveland Flea Holiday Pop-Up Shop at the Van Aken Market Hall. This event spanned six weeks, from mid-November to the end of December, and featured a wide array of Cleveland-based vendors.

Cosmetics, jewelry, candles, apparel, antiques, and home decor were just a few of the retail products featured during this event. For brands, this pop-up was an incredible opportunity to build awareness and drive sales; for shoppers, it was a chance to purchase locally made goods before the holiday season; and for the Van Aken Market Hall, it was a huge source of foot traffic and revenue.

Over the summer, apparel brand GV Art and Design opened a pop-up store in the historic Caxton Building—located one block from Progressive Field—just before thousands of baseball fans descended on the city for MLB All-Star Week. This was a strategic move to capitalize on the visiting spots enthusiasts who would be near Progressive Field, but likely wouldn’t make it out to their Lakewood location.

As an example of a non-retail experiential pop-up, Lake Effects was a one-of-a-kind pop-up holiday bar that came to Cleveland between November 29 and December 31, 2019. Visitors were treated to beer and craft cocktails, along with a healthy dose of holiday cheer and festivities.

What’s Next for Pop-Ups?

Cushman and Wakefield predicts that pop-ups in their current state are likely a cyclical phenomenon, resulting from the “soft” retail real estate market. That said, this emerging trend represents a more permanent shift towards non-traditional uses of retail space. 

Smart investors will keep a close eye on the pop-up trend and pop-up opportunities in their local market—after all, experience shows us that these “temporary” stores can often translate into long-term profits for landlords.