Empty Retail Space? Consider a Short Holiday Pop-Up Lease

Walk past a shopping center in October and you may notice a costume shop where another store used to be. Pop-up shops are short-term tenants. They move in for a season, sell what people want right now, and move out. Halloween kicks off the busiest stretch for them, and many keep going through the winter holidays.

If you own a vacant storefront in Orlando, Kissimmee, Lakeland, Tampa Bay or nearby, a pop-up may help you get through a slow stretch. It is not right for every space, though. Here is how to think it through.

Why a short lease can make sense

• Some income beats none. Even a few weeks of rent can help cover taxes, insurance and upkeep on an empty unit.
• The space looks alive. Lit windows and shoppers going in and out send a better message than a dark unit with a sign taped to the glass.
• Neighbors benefit. More visitors in the center can mean more people stopping at nearby shops and restaurants.
• It can lead to more. Some seasonal tenants test a location before signing a longer lease.

What to weigh before saying yes

A short lease is still a lease. Before you agree, think about the downsides.

• Wear and tear. Fixtures, signs and heavy stock can mark floors and walls.
• Timing. A pop-up could tie up the space just when a long-term tenant wants to move in.
• Your other leases. Some centers have rules about which uses are allowed, or promises to certain tenants about what others can sell. A pop-up should not break a promise made to someone else.
• Extra work. Turning the space over twice in a few months takes time and money.

Terms to put in writing

Handshake deals can cause trouble once the season ends. A clear written agreement protects both sides. Common items include:

1. Firm start and end dates, including the day keys must be returned and the space left empty.
2. Rent and how it is paid, such as a flat amount for the full term paid up front, or a base rent plus a share of sales.
3. A security deposit large enough to cover cleanup or repairs.
4. Utilities, and whose name they are in.
5. Signs and decorations, including what can go on the windows, the sidewalk and the building front.
6. Insurance, with proof that the tenant carries coverage that meets your needs.
7. Move-out condition, ideally backed by photos taken before move-in.
8. A way to end early if a long-term tenant comes along, if you want that option.

A real estate attorney can help you draft or review the agreement. Your insurance agent can tell you what coverage the tenant should carry and whether your own policy needs any changes.

Getting the space ready

Pop-up tenants want to open fast. A space that is clean and working will rent sooner. Before showing it:

• Make sure lights, outlets, restrooms and air conditioning work. Fall in Central Florida can still be warm and humid.
• Check that doors lock and any alarm system is working.
• Clear out old fixtures or trash left by the last tenant.
• Look for leaks or water stains, and fix them before someone stocks the shelves.
• Find out what local permits a temporary business may need, so the tenant can plan ahead.

Keep the long-term plan in view

A pop-up should support your bigger goal, not replace it. Keep marketing the space for a long-term tenant while the seasonal shop is open. Make sure the lease allows showings with fair notice. Use what you learn, such as how much foot traffic the unit gets, when you talk with future tenants.

It also helps to think about the calendar. A costume shop may want only a few weeks around Halloween. A gift or holiday shop may want to stay through the new year. Decide ahead of time how long you are willing to commit, and stick to it.

Questions to ask a seasonal tenant

• Have you run a pop-up before, and where?
• What will you sell, and how will you set up the space?
• How many people will work there, and during what hours?
• Where will deliveries come in, and when?
• How will you handle trash, especially after busy weekends?

Clear answers are a good sign. Vague answers are worth a second look.

If you own commercial space and are weighing short-term use, a local commercial real estate professional can help you size up the space, think through the terms and keep your long-term plans on track.