Mary Finnigan looks at the instant allure and background planning of temporary retailing
In the words of Oscar Wilde “spontaneity is a meticulously prepared art”, and this can certainly be said of the modern phenomenon known as the “pop-up”. Sometimes referred to as “flash retailing”, these short-term occupations by retail, restaurant and community organisations have increased in popularity in the past five years.
Temporary retailing has medieval roots in travelling market stalls and its long history has enabled its latter-day emergence as a sophisticated marketing tool. Pop-up shops and events have become increasingly common in the midst of the recent economic crisis, in particular following changes made after the Portas Review. The British Retail Consortium estimates that temporary retail is now worth £2.1bn to the UK economy.
As part of the drive to revitalise our high streets, planning rules were relaxed in 2013 to enable the temporary change of use of an empty shop for up to two years. This has led to numerous high streets welcoming pop-up shops, restaurants and theatres as part of their renaissance strategy.
However, despite the state-backed enthusiasm for the pop-up in the high street environment, it would be misleading to claim that these ventures have “saved” the high street from decline. They may have slowed the decline and injected short-term interest into these spaces, but the notion that a variety of short-term businesses can compete with and draw the public away from the sophisticated offerings of the out-of-town retail shopping environment (which in turn often stage their own pop-ups) has not yet been proven.
Longer-term retail leases will always play an integral role in the property market. In many instances, both landlord and tenant require longer-term business certainty with regard to income, outgoings and liabilities than can be offered by the short-term nature of the pop-up.
That said, pop-ups have rightly earned their place in retail history and have made a significant impact in the property market, with major landlords such as British Land, the Crown Estate and Grosvenor welcoming them onto their properties (see below).
Attraction of the pop-up
From the landlord’s perspective, as well as the obvious rental income, further advantages include business rates mitigation and improving the experiential nature of the property, which in turn attracts extra footfall. The consequence is then that the landlord’s lettable areas become more desirable for other potential tenants and ultimately attract higher rents.
From the occupier’s perspective, the pop-up is less risky than a standard lease in terms of rental exposure owing to its short-term nature. The actual shop or event provides the consumer with a new, exciting experience and is a positive way of communicating the occupier’s brand or idea to potential customers. The purported spontaneous and limited appearance of the event or retail experience increases its allure and reinforces the message that the brand is attractive, exclusive and impulsive.
Behind the scenes
While part of the attraction of these pop-up events is their seemingly impromptu and free-spirited nature, behind the façade lurks a well thought-out and carefully crafted legal document that records the obligations and liabilities of the parties. The landlord’s property lawyer needs to ensure that they meticulously document the event so that the occupier is obliged to pay the rent or licence fee, preferably in advance to minimise loss in case of failure.
They also need to ensure that the landlord and the tenant are clear on the rights that may be allowed to them under the Landlord and Tenant Act 1954. Leases of six months or more will benefit from the protection of the Act if the proper steps are not taken in advance. If there is any risk that the pop-up may stay in place for a protracted amount of time, the landlord must ensure that its occupation is documented by way of a contracted-out lease that incorporates a landlord’s rolling break right.
The occupier’s lawyer needs to ensure that their client has the ability to fit-out the property in accordance with its brand requirements, and the landlord will then require it to reinstate the property after the occupation ends. This will reduce the risk of the landlord facing additional costs at the end of the process in terms of repairing any damage and returning the property to its original state.
It is an inevitable balancing act for parties and their lawyers: it must be recognised that both sides require legal protection without hindering the overriding objective of getting the occupier into the property and trading as quickly as possible.
A firm fixture
The pop-up is now a successfully established and familiar feature of the UK property market. This is partly owing to recent economic conditions, partly to occupiers’ demand for short-term flexible space to meet their own customers’ needs and partly to the modern property owner’s desire to create vibrant and changing spaces. With all this in mind, it is clear that the pop-up will remain a “firm fixture” on the retail scene for the foreseeable future.
24 hours at Regent’s Place
British Land in 2013 temporarily transformed a future restaurant site in Regent’s Place, NW1, as a “den” for occupiers to use and relax in.
Stylist magazine used the space for its 24-hour challenge to create a full issue in 24 hours. The glass unit permitted the public to view what was happening inside, including a celebrity book signing and a midnight fashion shoot.
The occupation of the den was for a total of three days to allow time to set up and then reinstate the property. It was documented by way of a licence to occupy.
Other pop-up initiatives
The Crown Estate has hosted various pop-up shops on Regent Street, W1, in the past few years, including those for Marmite, Wired and Finesterre.
Liverpool University set up a one-month pop-up shop at Grosvenor’s Liverpool One this summer as a means to showcase student life.
Sydenham introduced the Pop Goes Sydenham initiative in 2013, which encouraged four short-term retailers to occupy empty shop space for several months at a time.
Mary Finnigan is counsel at King & Wood Mallesons
