With the holiday season a few months away, local property owners and landlords say they’re preparing for a small rise in short-term leases of three years or less, but some aren’t sure how many holiday pop-up retailers will fill their centers this year.
As vacancies continue to increase, landlord expectations will shift, says Jonathan Walker of Maestri Murrell Commercial Real Estate, who predicts a “slight increase” in short-term leases, or those with terms ranging from three months to three years instead of the typical five-year period, throughout the rest of the year.
“There will be all this extra space available, and anything that brings in money will be appealing to landlords,” Walker says. “They’re going to realize that if they can do a deal at $15 per square foot as opposed to $20 per square foot, that’s fine these days.”
However, Walker doesn’t expect the same to apply to pop-up retailers, which he says tend to benefit tenants more than landlords looking for greater stability.
In any case, many pop-up tenants are sitting back, eyeing the market and the state’s reopening plans.
Though she’s confident the space will be filled, Dottie Tarleton of Stirling Properties hasn’t yet heard whether the Halloween costume store that has popped up at the corner of Jefferson Highway and Corporate Boulevard will do the same this year.
Meredith Waguespack, who owns the Sweet Baton Rouge apparel line and co-created Local Pop Up Shop, says she’s exploring “doing something different” than the way she’s run her pop-up shop in the past, declining to elaborate.
Still, with current phase two restrictions like capacity limits in stores, Waguespack says pop-up retailers must become more creative in how they operate. For instance, she says some costume stores where customers have to buy the clothing first and then try it on at home will probably be more flexible with their return policies.
“People are still going to buy stuff, specifically for Halloween and the holidays; pop-up retailers just need a good game plan before those seasons,” Waguespack says, noting some holiday pop-ups, like the Junior League of Baton Rouge’s annual Hollydays Market, already plan to go virtual.
If Louisiana hasn’t progressed to another reopening phase by the holiday season, retailers will likely ask for more rent concessions, says broker Donnie Jarreau, but he doesn’t expect to have an idea about how this holiday season will shake out for at least another 90 days.
Longtime broker Mark Hebert, mentioning several short-term leases and spaces he’s made available to various tenants in the past few months, says landlords will continue rolling out the red carpet to potential lessees in the hopes they’ll become longer-term tenants.
“You’ll always have Christmas decoration people looking for short-term spaces, and those people will shop around until they find what they need,” Hebert says. “Most of my landlords have been in the game a long time and recognize we’re in this unbelievable cycle in the retail service business, but we’re all hopeful it will go away sometime in the near future.”