Traditionally, pop-up shops have largely been utilized by seasonal retailers. Many consumers have go-to stores for Halloween costumes or Christmas decorations that appear like clockwork just in time every year for their holiday needs. More and more, however, pop-up shops are being used by smaller, trendier retailers. Whether it’s an independent fashion designer seeking space for her new line of totally unique yoga pants or a local beekeeper looking to sell his colony’s latest batch of gluten-free, 100% organic honey, an increasing number of artisans are seeking a way to gain publicity and reach new customers while still operating within a more modest budget. Pop-ups allow these sorts of retailers and the mobility and flexibility move to their goods and services to different parts of town, while the short-term nature of their existence also helps build a sense of urgency for the customer, as well as an exclusiveness that can help elevate their brand.

Small entrepreneurs aren’t the only ones who benefit from the pop-up shop concept. Landlords are able to collect rent on otherwise unsightly, vacant space, and trendy tenants help attract new consumers to a project, while also giving regular visitors a reason to return. This unique arrangement brings unique concerns with it, as well. Consider the following three issues that are important to landlords in the context of a lease or license for a pop-up shop, particularly when dealing with the more modern influx of even smaller spaces and shorter terms.

Lease vs. License

Pop-up retailers come in varying shapes and sizes, so the type of agreement they reach with a landlord shouldn’t be one-size-fits-all. A retailer selling holiday decorations in a large space for a third of the year will demand more rights than an individual selling purses out of 200 square feet for two weeks. A more traditional lease agreement provides larger, longer-term retailers the stability and certainty that accompanies a leasehold interest for a set term. A lease gives a tenant comfort in knowing it has certain protected legal rights as a "tenant" throughout the entire term. Using a lease allows landlords to treat a pop-up retailer more like a long-term occupant, especially with respect to financial responsibility for contributions to CAM, repairs, and similar expenses.

In contrast, an owner should consider utilizing a license agreement when renting smaller space to short-term retailers. A license is preferable where an owner holds a superior bargaining position, because licenses are often times revocable, usually upon short notice to the licensee. This allows an owner to pull the plug with little repercussion in order protect its project and tenants if a pop-up shop is unsuccessful or if the space could be more effectively utilized by a long-term tenant.

Use Language

Landlords should be careful not to create project management or legal issues through overly broad use language when renting to a pop-up shop tenant, as it can cause problems on a number of fronts. The area in which careless use language is most likely to run afoul is in its effect on the long-term tenants in a project. Before entering into an agreement, even with a pop-up tenant, landlords should review existing tenants’ leases carefully to ensure that the pop-up’s operation doesn’t violate any existing tenants’ exclusive uses. A landlord should use caution to not only avoid the risk of liability for exclusive use violations, but also to avoid souring relationships with long-term tenants for the sake of temporary tenants. Landlords may also consider revising leases with long-term tenants in the future to include language in their exclusive use provisions that provides an exception for uses by short-term, pop-up-like retailers.

Additionally, unlike perennial pop-up retailers which establish a short-term retail presence year after year, a small-time shop owner with little reputational value or goodwill is likely not as concerned with maintaining good relations with a landlord. While an owner of a designer jeans pop-up may think that organizing a flash mob rave in the common areas will draw customers in and make for a great piece of social media, long-term tenants in the project may not be as amused. Therefore, it is critical to clearly define in the lease or license exactly how the space can—and, perhaps even more importantly, cannot—be used.

Build-Out and Alterations

One of the key benefits to landlords of pop-up shops is the relative ease and low cost of such a transaction. On the front end, landlords obviously shouldn’t be willing to grant many concessions through landlord-performed build-outs or allowances to tenants who will only occupy space on a short-term basis. But just as importantly, landlords should make sure they’re avoiding costs on the back end by not allowing pop-up tenants to make many, if any, use-specific alterations within a space. Provisions in a license or lease which require a tenant to seek landlord’s approval before making any alterations in the premises will allow landlord to avoid having to pay more money to restore the space to a shell condition when it’s time to relet that space to a long-term tenant. Landlords should avoid compromising the long-term marketability of space due to changes made by pop-up tenants.

As traditional brick and mortar storefronts continue to decline in the age of online shopping, alternative arrangements such as pop-up shops may become a useful niche for retailers looking to get their products in front of consumers without the unwieldiness or long-term commitment of traditional leases. Landlords should take advantage of the benefits found in short-term pop-ups, while at all times keeping an eye toward protecting their long-term interests.