print header

# 1 Commercial Real Estate Information Company

  • Find Properties 
  • Market Properties 
  • Analyze Properties 
Products
Commercial Real Estate News

Pop-Up Shops: How A Novel Concept Became a $50 Billion Business

Landlords Fill Vacancies, Retailers Test New Concepts
September 10, 2018

The District at Tustin Legacy uses pop-up shops to fill vacant mall space.


When online home goods and beauty supplier Brandless wanted to expand its reach to new customers, it opened its first storefront for a short 13 days in a vacant retail shop on Los Angeles’ bustling and cool Melrose Avenue this year. It is one of thousands of retailers driving a fast-growing phenomenon of temporary stores, known as pop-up shops, across the country.

The environmentally conscious company spread out its array of food and beauty supplies -- all sold for $3, and normally available only online -- across the 3,200-square-foot retail store and programmed 30 speakers on topics of health and wellness to draw in a larger number of potential shoppers.

Foot traffic and sales exceeded the company’s expectations and introduced a slew of new customers to the growing brand without requiring it to commit to a long-term brick-and-mortar lease. Meanwhile, the landlord of the property cashed a rent check for the month for vacant space previously occupied by a rug store.

The mutually beneficial arrangement is one reason why the pop-up shop concept has mushroomed into a more than $50 billion industry in the U.S. and is becoming a permanent fixture in retailing.

"The pop-up concept will stick around," said Ron Waldbaum, chief executive of retail brokerage Leibsohn & Co. in Bellevue, Washington, who works with See’s Candies to set up pop-up shops between November and Valentine’s Day. "They’re perfect for startups who’ve been online and want to try brick-and-mortar. And for more established companies, it can be a great way to sell a lot of merchandise over a certain time period and then be gone."

Pop-up shops -- temporary storefronts that give landlords fresh concepts to draw shoppers and fill vacancies - are taking up more space than ever in malls, shopping centers, galleries and creative spaces across the U.S.

PopRepublic, the Chicago firm that performed the economic impact study that estimated the value of the industry, is one of numerous companies across the country focused exclusively on working with property owners and retailers to create pop-up shops. Its national pop-up directory contains more than 35,000 listings.

Another company that finds and fills space is Storefront, which helped arrange Brandless’ pop-up shop in Los Angeles. Storefront receives $22 million worth of leasing demand for pop-ups every month -- a number it cannot keep up with.

"We don’t have all the space yet, but we have tons of real estate companies working with us in the U.S. and overseas," said Arnaud Simeray, Storefront’s vice-president of strategic partnerships. "This is not just a phenomenon. This is the way retail works moving forward."

A study by the National Retail Federation and Forrester revealed that 24 percent of brick-and-mortar retailers are testing pop-up stores. Even Amazon’s getting in on the craze. The world’s largest online retailer operates at least 72 pop-up shops across the country, according to its website.

Once considered a niche market, pop-up shops are now filled with big-name brands such as Nike and Google, and indie brands testing brick-and-mortar retail for the first time. The shops range from 800 square feet to as large as 15,000 square feet and larger, Simeray said.

Simon Property Group, the country's largest mall operator, is a PopUp client. Mall operator Kimco, which owns an interest in almost 500 shopping centers, recently launched a popup program in six markets: Denver, Dallas, San Francisco, Phoenix, Bellevue, Washington and Wilton, Connecticut.

Macerich, the nation’s third-largest mall operator, recently said it would devote 11,000 square feet at its Tysons Corner Center in Virginia into 18 different configurations for a testing lab for digital brands that want to experiment with a brick-and-mortar location. The company’s uses the term "pop-in" rather than pop-up, Chief Executive Art Coppola said on a recent earnings call.

"They can come in for three months to six months to one year," he said. "And if they like it, then they can go ahead and take a permanent location with us. I’m very bullish on what’s happening in this space."

Increasingly, many pop-ups offer experiences, not goods.

BubblePOP features bubble play areas for kids that recently opened at The District at Tustin Legacy.


BubblePOP recently opened at The District at Tustin Legacy, a 1 million-square-foot lifestyle center in Southern California. The company charges admission to an indoor bubble playground, where it holds bubble art shows and features a giant bubble castle.

Another pop-up, the Hall of Breakfast at The Gateway Mall in Salt Lake City, opened in June and features bacon slides and donut swings along with actual breakfast foods. It occupies more than 4,500 square feet in space that once housed a traditional retail operation.

The concept proved so popular that the company just signed another three-month lease, said Tonya Szerdahelyi, specialty leasing manager for mall owner Vestar Development Properties, which owns or manages 29 million square feet of retail real estate across the country.

Szerdahelyi uses social media to find tenants for Vestar-owned properties and has rented space for a week, a month or months at a time.

"It’s not like we devote certain locations in our properties for pop-ups," she said. "It’s kind of like, well, if this is vacant and I have a tenant, we’ll fill the space. We want the lights on. We’re just very opportunistic."

So are PopRepublic and Storefront. Simeray said big brands account for about 25 percent of Storefront’s business, followed by e-commerce companies testing concepts before opening their first stores, newer retailers who’ve never occupied space in malls and creative-type companies such as fashion designers and artists.

"The retail industry is clearly changing, and it’s changing fast," Simeray said. "Retailers and property owners need to be prepared to take advantage of it."


EDITOR'S NOTE: This story was updated to correct an editing error in the number of days Brandless' pop-up shop was open.


Rob Smith, National Retail Reporter  CoStar Group   
GET IN TOUCH        Contact CoStar News Team:   News@CoStar.com

 Find us on 

Welcome To CoStar's
Industry-Focused,
Award-Winning News

Winner of three Journalism Awards from the National Association of Real Estate Editors (NAREE)

Award-Winning News