Panelists in a session about short-term leasing, moderated by ICSC President and CEO Tom McGee, agreed that the volume of such lease deals is ramping up. “We’re seeing a lot more short-term deals over the last five years,” said Holly Rome, JLL's executive vice president of national retail leasing. “They can be as short as a day, but are more commonly two years or less.”

Short-term leasing is not new to the retail industry, given its roots stemming from seasonal pop-up shops. But the concept has gained attention from smaller retail brands looking to grow, thanks to social-media platforms such as Etsy, Instagram and Shopify, said Dan Wenhold, a principal at Fifth Wall Ventures, which invests in platforms for emerging retailers like London-based AppearHere. “We look at this as a sign of health in retail," Wenhold said, "and these brands are driving it.” 

The specialists explained what owners should pay attention to with such deals. “You have to build flexibility into the leases and look for well-thought-out business plans," said Rome, also pointing out the need to ascertain whether the tenant has the capital necessary to back the lease.

Short-term leasing should not be viewed as a temporary solution for vacant long-term spaces, panelists asserted. Rome said she is working with two owners to create dedicated spaces within their centers for short-term tenants. “This is often a great option instead of converting long-term space for this use,” she said. Temporary spaces can also provide opportunities for existing tenants to test out new concepts and brands.

Ultimately, owners should align their short-term leasing strategy to the strategy of the center, said Carol Spann Joyner, owner of Atlanta-based Joyner Retail Services. “That strategy will guide your decision about short-term leasing.”

Many short-term tenants can bring a unique retail offering to a center, broadening the customer base, said Joyner. “It’s about not only what the tenant can do for the space, but also for your entire property; how can this decision translate to something greater?”

The panelists concurred that communication is essential to making short-term deals work, not just for the owners and tenants, but also for the local market, in making clear that these spaces are indeed only temporary. “You don’t want to upset your customers by creating this new demand for a product and then [have it go] away without any notice,” said Rome. “You need to condition them [to know] that this is short-term.”

For e-tailers, leasing temporary physical spaces is a more cost-effective and efficient way to gain new customers than relying on such digital tools as social media, Wenhold observed. “We like to think that pairing these companies to real estate is going to be important, looking at the cost benefit from leasing that physical space, as opposed to the costs we have paying Facebook and Instagram and Google to acquire new customers online.”