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Entrepreneurs to Tenants

Avatar photo by Casey Woods, Executive Director | April 18, 2019
Millenial and Gen Z entrepreneurs grew up in a “rental” economy.  Some of the reasons younger generations largely avoid ownership are economic, but some relate to long term risk aversion.  Simply put, younger entrepreneurs often want to try out a concept before making a long term commitment.  That process sounds pragmatic, but the concept of short term trials is often opposed by years of property dogma.  Property owners want the security of long term leases, and short term stints can leave a negative mark on a property if a concept is deemed a “failure”.  So, where is the middle ground?
The concept of concentrated “pop up shops” can allow for more entrepreneurs to test entrepreneurial concepts, and eventually convert to long term property tenants.  Pop up shops are temporary placements within a commercial building for the purposes of market research and sales.  Pop up shops can last different time frames, depending on the focus of the property owner and the goals of the individual entrepreneur.  For the purposes of this article, we will explore different types of pop ups, how to identify them, and the likelihood of landing a long term tenant.
1. The event based pop up-  Over the next couple of months, Emporia will have thousands of people visit our community from far off lands.  These people may want local souvenirs, art work, additional food options, or event specific retail.  Smart landlords with vacancies in proximity to local events and activities can actively recruit tenants for event season, or a singular event.  The upside for this pop up strategy is that the types of businesses you should recruit are fairly evident and you may be able to generate a premium price (depending on your location).  The downside is that this strategy may have a lower probability of landing a long term tenant because of the limited scope of the pop up shops interest (only during events).
2. The holiday pop up-  Christmas stores are fairly common, but stores that focus on Halloween, Valentines Day, and other holiday events (we could see a pop up that focused on Day of the Dead, for Artist Walk example) can generate traffic and internal sales.  Contracts should clearly state entrance and exit strategies for holiday types of pop ups, because you may want to rotate different holiday themed businesses in the same space.  Similar to event base pop ups, there is a singular holiday focus, but some holidays may produce ancillary markets that last all year (Day of the Dead vendors may convert to an import business, for example).
3. The shared risk pop up-  Pop ups can share risk in two distinct ways.  The landlord can take a percentage of sales instead of a set rent rate (the better the tenant does, the better the landlord’s profits).  Landlords may put multiple pop up concepts in the same area to diversify income streams (vignette businesses tend to drive higher costs per square foot than a singular tenant), but you do have to ensure that personalities mesh or the whole concept can suffer.  Shared concepts can entice more entrepreneurs to try a space, and there is some evidence that suggests long term tenants can evolve from this type of pop up.
4. The market test pop up-  This type of pop up shop requires a longer time period, with a chance for assessment after the conclusion of the shop.  Typically, you want to simulate the highs and lows of retail to give these pop ups a realistic concept of their business sales cycle.  Some successful pop up tests run November through January so businesses can build sales during the Christmas rush, but they can also experience inventory reductions often associated with January.  While pop up shop entrepreneurs are testing the market, it is also imperative for property owners to actively market their buildings to targeted business types.  Successful commercial property ownership is a proactive business that requires a property owner that actively seeks out target businesses (or at the bare minimum, business types) as potential tenants.  During a market test, economic development agencies, property owners, and prospective entrepreneurs work together to find proper fits, collect data, make necessary adjustments, and determine if concepts should go “full time”.
All pop ups require a clean, safe location with adequate utilities and amenities.  Simply adding a pop up strategy to a building will not produce long term tenants (conversely, putting a pop up shop in a shoddy structure will simply broadcast the unsuitable nature of the facility).  If property owners are willing to make some concessions and create pop up partnerships, long term tenants can flourish.  
Emporia Main Street is considering a consolidated pop up strategy (several pop ups in a concentrated area over a set time period).  If you are a property owner and are interested in listening to details concerning how the project might work, and how your property could potentially participate, please contact Emporia Main Street. 

About the Author

Casey Woods, Executive Director

Before accepting the director position in March of 2009, Casey worked in both retail and agricultural jobs in the family businesses. A lifelong resident of the Emporia Area, Casey was a ten year volunteer for Emporia Main Street prior to his appointment as director. During that time he served as the board president and chair of the Economic Vitality Committee.

Casey also serves as a partner in PlaceMakers, LLC, a consulting firm that routinely works with both large and small communities, and their businesses, to promote sustainable economic growth through community and economic development practices. Casey consults with businesses, organizations and communities to understand their market capacity and fill vacant spaces. He has been involved in two projects that included crowdfunding as a part of their overall business funding strategies, Radius Brewing and Twin Rivers Winery & Gourmet Shoppe.