Pop up retail units have been around for a while and are particularly popular in the U.S. They have started appearing more frequently in recent years - quite literally popping up throughout the UK, especially over seasonal trading periods. Recent statistics have found that the pop up retail unit industry generated a staggering £2.3 billion in turnover in 2015 for the UK alone – equating to 10,500 pop up shops and employing roughly 26,200 people. Although practical and effective as a retail unit – they also have several business advantages for tenants and landlords alike.
For entrepreneurs who are trying a new business venture or even entrepreneurs with an established business - the pop up retail unit concept is ideal- providing a fertile retail environment for a minimised financial outlay. Business entrepreneurs can enter into a tenancy agreement with a reduced commitment for a much lower rental fee with their landlord for a pop up retail unit. They can therefore see if the business venture will work before entering into a lengthy and costly lease arrangement. They can keep costs down as the service charges will be much lower for a pop up retail unit than they are for a retail unit. Ultimately the entrepreneur owns the pop up shop itself so they have the freedom to relocate it to wherever they want.
The obligations are not as onerous either with a pop up retail unit, for example, repair obligations will be minimal, there won't be landlord’s fixtures to replace and the tenant will be less likely to have a huge dilapidations schedule at the end of the term. These types of advantages benefit established businesses as they can try a new location or new products by setting up a pop up shop, and if that is successful they can then look for a suitable long term retail unit.
For landlords with an abundance of retail space, pop up shops have many advantages. This includes the opportunity of bringing in tenants who are looking to sell the latest craze product, inevitably attracting customers whose interest has been sparked; which in turn can generate additional custom and interest for the long term tenants and traders who are in the retail units nearby. More importantly for landlords the pop up shop provides the opportunity to generate rental income for what would otherwise be under utilised space -be it the back of the car park or common areas in the shopping mall. If the pop up shop is successful a landlord would also be in a stronger position to convince and tempt the tenant into one of the retail units for a longer term and for higher rental fees.
As always whether you are a landlord or a tenant it is key to have legal advice before entering into any commercial contract no matter how low the rent or how short the contractual term.