Square Feet: Pop Up Goes the Retail Scene as Store Vacancies Rise

Square Feet: Pop Up Goes the Retail Scene as Store Vacancies Rise

- in Real Estate

Ms. Elias said she had also seen a change. In 2012, when she started looking for physical stores to augment her online business, she had to cold-call landlords directly, she said, because “brokers had never heard of pop-ups.”

Landlords are finally coming around, she said, but they may have no choice, as stores continue to go out of business.

Ms. Elias added that “it must be really scary right now” for owners in SoHo, where most of her pop-ups have been.

But the new stores can cause landlords to lose money, said Stephen Summers, the managing director of Highland Park Village, an upscale shopping center near Dallas that is in the midst of a multiyear renovation.

In late 2014, Mr. Summers installed Goop, an online retailer founded by Gwyneth Paltrow, for a four-week run in a former grocery store at his historic red-tile-roof complex, a widely copied model for the 20th-century shopping center.

Because the store, at 20,000 square feet, was considered too large for Goop’s needs, Mr. Summers had to construct a more intimate 1,500-square-foot berth, including dressing rooms. That renovation ultimately caused the deal to be unprofitable, he said, even though Goop drew so many customers that there were lines around the block.

But Mr. Summers said he was glad to have a relationship with the company. Goop, which has popped up in multiple spots, is planning to open permanent locations, and Mr. Summers plans to court the company. “Pop-ups are a responsible way to grow,” he said.

Like Goop, other web-born businesses are seeking a bricks-and-mortar presence as well, aware that most shopping is still done offline, and are turning to pop-ups to get their start.

For instance, Daniel Wellington, a six-year-old watch company with a heavy social media presence, has been selling its timepieces in part through department stores like Bloomingdale’s and small jewelry shops. But in November 2015, it opened its first temporary store in the East Village of Manhattan. A year later, it opened one in nearby SoHo for two months. Because that location was a success, Wellington signed a more permanent six-year lease for the same space, said Ola Melin, a company spokesman.

Wellington also has pop-ups in Boston, Miami and Honolulu, among other cities, Mr. Melin said.

The designer Jamison Albritton at work at Artists and Fleas, a pop-up market in SoHo with tables and racks from different vendors.

Dolly Faibyshev for The New York Times

In SoHo, where pop-ups are especially popular, the range in rents can be significant. Long-term tenants have been paying in some cases up to $150,000 a month, brokers and tenants say. But pop-ups can get deals for $25,000 a month. They generally pay all their rent upfront and agree to leave with a few days’ notice if a longer-term tenant is signed.

While some buildings may be hard to get into, others seem more inviting, like 543 Broadway. That is where Vintage Twin — which is owned by Ms. Elias and her twin sister, Morgan — has been set up since April, and which bustled with shoppers on a recent weekday afternoon. A tie-dyed Grateful Dead concert T-shirt from the 1990s was $244.

Several pop-ups have set up camp at the address, a Beaux-Arts edifice, since Carlo Pazolini, a shoes and accessories store, closed in 2015 after a four-year stay.

“To keep the neighborhood alive and vibrant, you need to have retailers occupying space, especially in today’s day and age,” said Jared Epstein, a principal of Aurora Capital Associates, the building’s landlord.

Similarly, last year, Aurora installed the Broadway Market Company, a pop-up with various vendors who sell handbags, jewelry and stationery, in a vacant building it owns nearby. Its lease is expected to run about 18 months.

Likewise, an Aurora-owned building in SoHo in May welcomed Artists and Fleas, another market with tables and racks from different vendors, which replaced a 10,000-square-foot Armani Exchange store that closed in March. Artists and Fleas has committed to a one-year lease, Mr. Epstein said.

Swooping in to capitalize on the rash of empty stores in New York and elsewhere are some new brokerage-type businesses, which charge fees to landlords as brokers do and also sometimes market spaces concurrently with other agents.

Examples include Space in the Raw, a two-year-old firm that for about a month last fall joined Taco Bell with Sony PlayStation for a SoHo pop-up, in its first New York retail deal.

There is also Appear Here, a four-year-old British company that opened a New York office in April. Since then, it has found homes for dozens of pop-ups, said Ross Bailey, its chief executive, including Misbhv, an apparel company, on East 34th Street, in a part of Midtown where empty stores are evident.

Mr. Bailey says that contrary to popular belief, young adults want to touch what they buy and also enjoy the physical shopping experience. Besides, “it would be a sad world if everybody was staying at home looking at screens,” he said. This month, Appear Here raised nearly $13 million in venture capital, bringing its total in raised funds to about $21 million.

Joel Hodgin at the Broadway Market Company, a pop-up with various vendors.

Dolly Faibyshev for The New York Times

But in a way, pop-ups, despite their growing ubiquity, are like Band-Aids on deep wounds when it comes to the problem of stubborn vacancy rates, brokers say.

“Rents are just too high, and it’s just too cost-prohibitive to be here,” said David Barreto, the founder of Cast Iron Real Estate in SoHo and someone who encourages landlords to do what it takes to fill spaces. “It’s really just sad.”

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