“Pop-up” shops should not result in “pop-up liabilities”
We’ve all seen them and you’ve likely shopped at many of them. Whether it is the seasonal Halloween or Christmas shop, an art gallery exhibition of a hot local artist, or even more famous, nationally branded companies using pop-up shops to build up the profile and exposure of new products, these temporary tenancies continue to reap benefits for landlords and tenants alike. A “pop-up” retail space is simply a retail tenancy involving a tenant which “pops up” and then is gone anywhere from one day to a few months later.
There are several benefits of such pop-up shops to both landlords and tenants. For the landlord, pop-up shops can provide a short-term answer to vacancies in a building. Under normal circumstances, a landlord would obviously prefer a long-term credit tenant; however, during the times of vacancy while pursuing such a tenant, an ongoing empty space can create a negative effect on the building. A short-term pop-up shop can add an element of freshness, vibrancy and, of course, foot-traffic to an otherwise stale space and, let’s not forget that discounted rent is better than no rent at all. For the tenant, a pop-up shop can be a cost-effective way to not only sell seasonal products in a brick-and-mortar space but also a method to test and market new goods and services without committing to a long-term lease.
Although such pop-up shops can be appealing to both landlords and tenants, the lease document memorializing such a tenancy should still be carefully contemplated by both sides.
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