Pop-up shops: It’s all about location

Twenty years ago, short-term retail businesses could only be found in resort towns during the seasonal peak. Today, pop-up businesses are a growing a part of the retail landscape.

The pop-up trend has proven a relief for many property owners looking to secure income after the end of a long lease.

Location is the key to success

Walking through inner-suburban strips like Northbridge in Perth or Bridge Rd in Melbourne, you can’t help noticing their numbers, ranging from the cheap and cheerful to the exotic and fashionable.

They’ve also been a winning strategy for new fashion, fragrance and food brands wanting to test the market in popular shopping precincts like Sydney’s Oxford St.

Pop-up businesses are a growing a part of the retail landscape.

But in resort areas, pop ups are popular only in markets where the local conditions are right. In towns with a limited supply of retail shops, pop ups are few and far between.

I asked David Gordon at Ray White Byron Bay why pop ups were not part of his market. “It is about the dynamics of local supply and demand. We have a small commercial strip here and it tends to be close to fully leased, so there isn’t much room for them,” he says.

But it’s a different story in towns with a larger number of properties for lease spread across competing strips and centres. Where businesses can find locations with a number of vacancies, it creates opportunities for them to take advantage of a seasonal surge in visitors.

Read more: Beginners guide to investing in commercial property

Pop up shop in Sydney [Image: Paper Runway]

Nick Dowling at Colliers International on the Sunshine Coast says pop ups are an established part of his local market.

“We tend to get a lot here in Mooloolaba Esplanade and Hastings St in Noosa, often starting in September and running for around three months in to the busy Christmas period. They’re also are a feature during the Easter / school holiday period,” Dowling says.

In resort areas, pop ups are clustered predominantly around fashion but occasional jewellery, gifts and homeware and apparel categories are also popular. The businesses using pop-up stores include discount retailers, up-market brands following their market in the holidays and internet-based business who want to create a physical presence and sell excess stock.

Pop-up shop trends

Trends in the major capital cities tend to flow to resort areas. One example is the emergence of very short-term leases before and during events. Dowling says he receives a lot of these types of enquiries before the big triathlon competitions which are held on the Sunshine Coast.

One example is the emergence of very short-term leases before and during events.

“The triathlete brands love to have a presence here when there is a big event on, however many of them are only interested in the week leading up to and during the event.”

Another trend coming from the cities to the coast is the mobile food category. While the burger and ice cream van has long been a feature of holidays at the beach, food truck vendors selling single source coffee, vegetarian tacos and gourmet burgers have begun appearing at popular summer destinations like Sorrento in Victoria and Port Stephens in NSW.

Pop-up shops and retail rents

I ask Dowling what effect pop ups are having on retail rents and he says: “For the local market as a whole, I would say the balance of agreements tend to be struck around the going market rate, with owners trading off their expectation of a high rent for short-term leases with the certainty of income now.”

“For the individual owner, it depends on how motivated they are to see income in the short term.”

Read more: Top of the pops: retail’s latest trend