May 12, 2016
Take a walk down Chapel, Brunswick, Smith Street or adjacent alley in Melbourne and you will likely find a temporary store of some kind. Whether that be a new food concept or a new local clothing label, these temporary stores are becoming extremely popular amongst those launching their idea. The buzz word attached to these temporary sites is ‘pop up’ which has quickly become a part of our vocabulary over the past five years.
But why are these non-traditional ways of doing business so popular?
Business Risk is a major deterrent for many wishing to move into business. Most people have an idea deep down but a combination of factors created by life’s circumstances or perceived fears often stops us from taking the plunge. Will I make sales? Do I have the cash flow to do this? What will I do if we fail? I want to buy a house. I have a family to think about. They are all valid questions of any current and future business owner.
If your concept requires a bricks and mortar presence and you are looking at leasing, you are likely to sign a lease with a term for over a year and potentially up to ten years. Coupled with this, there is the security deposit of at least three month’s rent to pay plus a personal guarantee engagement which means your business structure may not shield you if you not be able to pay your rent.
The pop-up trend that we see developing is providing opportunities to businesses’ which were previously inaccessible.
Whether it be a commercial kitchen, dining area, empty room, food truck or a multi-purpose shared area, these places are offered to businesses for shorter periods of time. Whilst you may pay a higher rent month on month compared to a longer lease, you are unlikely to require large bonds or agree to long term commitment with the landlord.
But why have pop-ups become so common? With the digital disruption and the lack of need for physical presence for many business models, traditional retail precincts have suffered and landlords and agents have been pushed to effectively utilise the space they own. This works for both sides as offering shorter term leases is a more attractive proposition for business owners who are yet to ‘test the market’ whilst landlords are reducing the number of vacancies they have. Often these are in high profile locations that may not be accessible without the need to sign expensive leases.
For example, short term kiosks within shopping centres are a very popular option a lot of businesses now – especially over the holiday period when traffic is high. If you are a seasonal business, such as ice cream or beverages, this avenue may be the perfect way to launch your idea.
Agents and landlords have woken up to the trend as we now see many spaces designed for such temporary pop-ups or the ability to co-share a space. Some agencies even specialise in pop-up style leases. We see clients successfully make use these spaces to launch their idea and, once proven, move on to their first permanent site.