Are you wondering how much you should charge vendors at pop-up shops? If YES, here are top 7 factors to consider about charging for pop-up shops.
Pop-Up Shops have been a remarkable, dynamic, and exciting form of retail. Gradually, they have become very prevalent among entrepreneurs and even bigger corporations that understand the intricacies in using the platform to reach customers.
Pop-Up Shops are so unique from one another that they immediately provide each community with the extra flavour, colour, and attraction that are more or less only seen in large venues such as mega-malls.
As a landlord, you can improve your vacant space’s appeal, give back to your community, and help an entrepreneur while they help you! Ideally, pop-up shops can be set up in a variety of locations, including neighborhood shopping centers, malls, airports, convention centers, concert venues, and more.
The pop-up concept is specifically enticing to entrepreneurs looking to test their new business or products without the ups and downs associated with signing a traditional lease.
However, pop-ups are not just for small businesses. Experienced marketers for established retail giants and online merchants are steadily leveraging pop-ups stores to explore new markets and analyze consumer interest in creative product lines.
According to reports, pop-up retail has grown into an $80 billion industry. Although landlords will always prefer long-term leases with established tenants, a good number of owners understand the value of experiential retail. Pop-ups are known to establish momentum and help drive shopper traffic.
And successful pop-ups may progress towards being longer-term tenants with bigger footprints. Although there are numerous benefits to pop-ups, landlords and tenants should consider several legal issues inherent to these arrangements.
Even though a long-term lease commitment can be perfect, a pop-up operation is not entirely unattractive to landlords. This is because the prospect of getting in some rent is way better than no rent at all. In addition, the aesthetic value that an active pop-up operation can bring to a location should also not be underestimated. It can help consumer confidence and buttress the retail space as being desirable.
In addition, the short length of these leases can also be a massive advantage to landlords by offering immediate mortgage assistance while leaving prospects open for long-term leasers once the market (even a hyper-localized one) becomes more encouraging.
There are many websites, community organizations, and other resources for you to attract pop-up entrepreneurs to rent your space. A good number of landlord-tenant matching sites on the internet include Tempo Space, Pop Up Go, and This Open Space.
Factors That Influence How Much You Charge Vendors at Pop-up Shops
Have it in mind that almost every event requires a fee from the vendors. Renting a remarkable, pop-up shop is another opportunity for business owners owing to the low costs associated with the office or retail space. As a pop-up landlord, the average cost of a pop-up shop is an hourly fee based on the space’s size. They can range anywhere from $85 to $200 an hour or more depending on certain factors, and these factors include;
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Prevailing Rental Rate
This is one of the most vital factors that dictate how much a landlord charges for a property. Most times, landlords consider the amount charged by other landlords in the area and fix the rent charged in alignment with the rental rate of other similar properties in the locality.
Have it in mind that too many differences between the prevailing rental value in the area and your rental may discourage tenants and divert them to other options available. Owing to that, be considerate of the monthly mortgage cost and other related costs of repair and taxes which you have to pay.
Lease or License
Also, note that the type of agreement used for the retail space and the tenant’s requirement influences the price you can charge vendors at pop-up shops. This is dependent on the length of the tenancy and the prospect that it could turn into a longer-term arrangement in the future.
However, both parties are expected to be aware of the fundamental difference between a lease and a license. A license does not in any way confer any legal interests in the retail space but instead offers adequate permission to the tenant to leverage the location for an agreed purpose, in this case as a pop-up shop.
Meanwhile, a lease gives the tenant exclusive possession of a space in exchange for rent over an agreed term and with a number of agreed liabilities and responsibilities on both sides.
This is one of the most vital factors affecting rental rates for property and real estate in general. Note that the location of a property will more or less establish a baseline rental rate. Popular areas such as those that are on the roadside or located near the inner city, schools, or colleges can attract higher rents due to greater demand in the market.
Also have it in mind that rents are calculated on a price per square foot basis because, most times, spaces may be divided or combined. Note that these numbers give industry professionals a quick snapshot to compare rent prices among various properties.
Since most retail tenants (unless they’re in an indoor shopping mall and share hallways, bathrooms, etc.) are the only occupants of their spaces, rentable square footage is commonly used to calculate rent.
A retail tenant may ask for the right to carry out necessary alterations to make the space ideal for their short-term needs.
However, owing to the short-term nature of pop-up arrangements, landlords might also be eager to ensure that the space is kept in good condition by the tenant and is easily returned to its original state should a long-term tenant show interest.
Owing to that, the amount of money that will have to be spent to return it to its original state will also be included in the amount charged by the landlord for the space.
Utilities and Maintenance
It is always recommended that every agreement should state who must pay for utilities and maintenance of the premises. From the tenant’s perspective, they may want the landlord to ensure that all systems work properly from day one.
The tenant might also want the landlord to be tasked with all costs and expenses of continual maintenance of these systems. In the same vein, the landlord may want to minimize the amount that he is investing in the space given that the tenant is short term.
Although pop-up arrangements are short in nature, the risks may be just as enormous as those found in a long-term leasing arrangement and it all tends to influence the price and rent charged to the vendor.
In the real estate business, vacancies can be profitability killers, but some landlords are known to be more tolerant of vacancies than others.
For instance, if a landlord has outlaid a big down payment and their monthly expenses do not stress them, then they can survive a few months without a tenant and without a problem; howbeit, it may be better to charge quite more for rent, patiently waiting for the perfect opportunity to cash in. Otherwise, the landlord may have to fill the property as soon as possible.