How the Pandemic Pushed Landlords to Get Creative to Fill Retail Space

In the fall of last year, many retail landlords were breathing a sigh of relief. They had gone all out to fill empty storefronts during the grimmest days of the pandemic, offering concessions to tenants and saying yes to pop-ups. That strategy appeared to pay off.

By the third quarter of 2021, the storefront scene was recovering in many parts of the country. Thanks to vaccinations, the return of international travelers and pent-up consumer demand, shoppers were flocking to malls and downtown districts and prospective tenants were signing leases. Asking rents, which had plunged in 2020, were leveling out and even rising in some places.

But the Omicron variant of the coronavirus may throw a wrench in the recovery, and landlords may need to extend temporary measures to fill empty spaces.

At the Oculus, the transit hub and shopping mall in Lower Manhattan, foot traffic has fallen precipitously recently, said Diana Grasso, the vice president of Westfield World Trade Center. “You saw the impact almost immediately,” she said.

Other landlords are allowing their empty windows to be filled with artwork — efforts that generate good will and make vacant spaces look less bleak. In Philadelphia, a tourism and marketing agency commissioned artworks that paid tribute to local Black- and brown-owned businesses.

John J. McCullough, general manager of Nightingale Properties, agreed to have artworks from the program placed in the windows of three of his downtown buildings. “We saw it as a win-win,” he said. “It was an opportunity to help out these small-business owners. And we get more eyes on our space.”

Some landlords welcomed pop-up retailers, and not only during the typical holiday season. Retailers have embraced the trend as part of their marketing campaigns — luxury brands use them to kick off collections, e-commerce companies to introduce themselves, and companies of all types like the opportunity to test out a site. But landlords, and their lenders, accustomed to the financial security of long-term leases, have not always been on board.

During the pandemic, though, more landlords gave pop-ups a try, hoping to bring life to languishing ground-floor spaces. They might not earn as much from the arrangements, but at least some revenue was coming in. And the deals often involve quick licensing agreements, rather than more complicated leases, and no outlay for capital expenses. Plus there’s always the chance that a pop-up may become a permanent tenant, a trend known as pop-to-perm.

“A lot of real estate groups want to have a relationship with the next Warby Parker, the next Casper,” said Melissa Gonzalez, founder and chief executive of the Lionesque Group, a retail consultancy. “This is how you get those relationships.”

Storefront, a digital listings platform where landlords advertise retail space suitable for pop-ups, saw more owners listing spaces, said Nicholas Roberts-Moore, the company’s head of marketing.

Source link Real Estate

Be the first to comment

Leave a Reply

Your email address will not be published.