Chapter 6: The Role of Pop-Up Shops in Community Development

Chapter Overview

This chapter looks at the potential role of pop-up shops within the area of community development. Communities can be defined in many ways, from geographic boundaries (e.g., neighbourhoods), shared identities (e.g., shared cultural heritage or beliefs) and increasingly, as virtual communities (e.g., social media platforms such as Facebook). A community is defined by both its members (or stakeholders) and their relationship to one another.

 Setting the Context

1. Community Development and Streetfront Revitalization

The term community development can be used to describe a range of community-based interventions and their outcomes. It is typically seen as a grassroots (or ground-up) process through which communities seek to improve their collective well-being and quality of life. This can involve working together to improve health, reduce poverty, strengthen the local economy or address any range of social, economic, cultural or environment goals.

Community development is a collaborative process whereby the community takes responsibility for tackling issues of common interest. Development does not necessarily mean that growth needs to take place, rather development is used to refer to making changes within the community for the betterment of the community as a whole. Community development can therefore be seen as a vehicle for change. It needs to be planned and organized both by and for the community. Community development is often associated with concepts such as economic development, urban renewal and revitalization.

As many pop-up shops are located along streetfronts, this chapter will focus on how pop-up shops can contribute to the revitalization of traditional commercial strips in urban markets and the impact that this can have on the local community. We will look at the ways in which pop-up shops contribute to community building, the stakeholders in the community that are interested in and impacted by pop-up shops and the challenges facing pop-up shops in terms of translating short-term revitalization into long-term commercial vitality and vibrancy. We will explore three case studies of community-led pop-up shop initiatives from Canada, the US and Australia. An additional generic case study will highlight the challenges associated with transitioning pop-up shops from temporary to permanent use.

1.1 Identifying the Need for Streetfront Revitalization

Before we look at how pop-up shops can contribute to streetfront revitalization we need to identify the characteristics that define commercial blight along streetfronts. Why do streetfronts need to be revitalized? What are the signs of blight? When does the community become concerned? While the most obvious indicator of the need for streetfront revitalization is store vacancy, it is important to note that there are many indicators that may signal the need to engage in streetfront revitalization activities. For example, over time, the quality of the tenants along a streetfront may deteriorate, there may be increased criminal activity along the street or the streetfront may appear unkempt with buildings in need of repair. Pop-up shops can be part of the process of re-energizing streetfronts by temporarily occupying vacant spaces, engaging the local community in such efforts, and potentially becoming long-term tenants.

1.2 Store Vacancy

The ultimate sign of commercial distress is when a business goes through the process of closing and leaves behind a vacant property that is placed back on the market. When retail space becomes available, it is left up to the market to determine if there is enough demand to re-lease the space. Does anyone want to lease the vacant space? If so, at what cost, for what use and over what period of time?  Rabianski (2002) describes three types of vacancy: frictional, cyclical and structural.² The differences between these types of vacancy help illuminate the challenges and opportunities involved in turning a vacant space back to productive use again.

1.2.1 Frictional Vacancy

Frictional vacancy can be described as “the cost of doing business”. Frictional vacancy is inherent to a functioning real estate market, and is therefore not of any special concern to the store owner/landlord. An example of this would be a landlord securing a major retailer to take over an abandoned store, but the tenant being unable to open for many months due to the renovation and refit of the property. This space would be vacant from a consumer (and community) perspective, but not from the landlord’s perspective. This can be thought of as a form of transactional vacancy, whereby there is a firm commitment to occupy the space at later point in time. The vacancy is therefore simply part of the transition from one tenant to the next. Many frictional vacancies are extremely short-term as owner/landlords do not want their properties to sit empty without tenants paying rent.

1.2.2 Cyclical Vacancy

Cyclical vacancy occurs when a space is vacant as a result of a weakening economy. This indicates that the space would otherwise be in demand, however is not currently leased due to broader economic weakness in the area or region. While this is problematic from the owner/landlord perspective, the solution rests mostly in an economic recovery for the region. Such downturns in the economy impact the entire community.

1.2.3 Structural Vacancy

Structural vacancy is the most problematic and challenging to owners/landlords and the community. It is space that is not demanded in its current configuration, as it is either too large or small to be reasonably used and/or in need of major renovations and reconfiguration (or adaptive re-use of space such as converting some of the retail space to residential units). It often requires redevelopment and associated capital expenditure in order to be absorbed into the market. From a community perspective, this is a major issue as structural vacancy represents long-term vacancy and is typically associated with significant sustained commercial blight. Streetfronts with widespread vacancy, boarded-up properties and often absentee owner/landlords have numerous knock-on effects for the community and without intervention, can spiral down into extremely challenging revitalization projects that fall well beyond the bounds of grassroots interventions. In extreme cases, very high structural vacancy may involve the local government expropriating and demolishing properties as they prepare the sites for future development projects.

Table 6.1 Types of vacancy²

Table 6.2 Prioritizing vacant property strategies³

2. How Can Pop-up Shops Contribute to Streetfront Revitalization Efforts?

Pop-up shops facilitate the temporary activation of vacant space. Given the role that consumption plays in our modern-day lifestyles, the revitalization of local retail and services is a crucial element of community development. As Smart Growth Americas note, pop-up shops can be part of a broader retail revitalization plan and strategy aimed to create diverse retail and build a “shop local” culture.

Maintain ‘pop-up’ locations to grow local start-ups and experiment with retail formats. As downtown values escalate, smaller businesses can find it difficult to locate affordable space, and small retailers such as artisan boutiques, may find it difficult to generate enough income from sales to justify a permanent storefront. Pop-up shops generate interest among shoppers while giving entrepreneurs the chance to test the waters or reach new customers. This strategy can be particularly useful in areas with several vacant storefronts.⁵

Figure 6.1 Benefits to Property Owners and Tenants in Building Vibrant Streets

Source: Danforth East Community Association

3. Pop-Up Shops and Sustainable Community Development

Traditionally, the standard measure of success in streetfront revitalization is the conversion of short-term vacancy into long-term leases. However, the widespread disruption that is taking place in the retail sector today is fundamentally challenging traditional retail business models. The concept of long-term retail lease agreements may no longer be a true metric of success in an environment that increasingly places emphasis on experiential as opposed to transactional retail space.

Pop-up shops represent a double-edged sword for the retail and real estate industries – whether we are looking at independent retail along streetfronts or major chain retail stores within major shopping centres.  Pop-up shops provide tremendous opportunity to re-invigorate streetfronts and shopping centres, yet also contribute to the ongoing challenges that retail tenants and their landlords face in determining the need for retail space, its value and the best way to manage space.

From a streetfront perspective, the management issues are particularly acute due to fragmented ownership and the lack of contiguous spaces to manage. When you place these changing retail business models into a community development context it becomes even more challenging. As Frank and Smith (1999) note, community development is a tool for managing change, but it should not be used as a “quick-fix or short-term response to a specific issue within a community”. They go on to state that:

community development is about community building as such, where the process is as important as the results. One of the primary challenges of community development is to balance the need for long-term solutions with the day-to-day realities that require immediate decision-making and short-term action.⁶

However, there is a growing interest in tactical urbanism with guerilla urbanists engaging in a broad range of temporary revitalization projects, from art work on sidewalks to cleaning storefronts, with the assumption that such short-term projects will ultimately lead to long-term change.⁷ If pop-up shops are nothing more than temporary stop-gap measures, they are unlikely to create long-term externalities (or spin-off effects) for the community. However, despite their small scale, pop-up shops can be viewed as a catalyst for change and their success may prompt more substantive revitalization projects over the long-term.

While these small investments can have big impacts, pop-up programs are not an end-all be-all solution as a standalone initiative. When pop-up programs are integrated within a larger portfolio of investments or interventions, long-term change is more likely. Pop-up initiatives are especially well suited for collaboration that allow multiple actors to contribute to the change they want to see. Involving multiple partners at the local, city, region and state level when creating a larger vision for business district revitalization can help instigate additional investments. When pop-up is part of the vision, the momentum and excitement seeded by small investments and small projects help illustrate potential solutions and can help make the case to begin tackling larger opportunities and challenges.⁴

The Case Studies

Danforth East Pop-Up Shop Project

Danforth Avenue is one of the City of Toronto’s major east-west arterials, running from Yonge Street in the west all the way to Scarborough in the east. It has long home to the trendy and affluent Greektown neighbourhood, but by 2012, there were segments of Danforth Avenue to the east that were showing signs of escalating retail vacancies.⁸ One specific group of residents, the Danforth East Community Association (DECA), decided to tackle the challenge proactively.

Starting out with the specific aim of increasing foot traffic along the eastern part of Danforth Avenue, from Monarch Park Avenue in the west to Main Street in the east, DECA decided to activate empty storefronts with pop-up retail that would attract local shoppers, generate activity on the street and provide spaces for entrepreneurial and start-up shops.

The Pop-up Project was officially launched in 2012, spurred on by an inspiring presentation from Marcus Westbury of the Renew Newcastle program in Australia. In 2013, in partnership with community agency WoodGreen Community Services and funder The Metcalf Foundation, the program hired two Economic Development Coordinators to keep up the momentum and drive the process forward.

Over the next five years, the team would: identify empty storefronts along East Danforth; engage with and encourage the participation of landlords; prepare available storefronts for pop-up tenants; and both invite and screen prospective pop-up retailers to join the program. Volunteers were also involved in every step, from marketing to screening of tenants.

The program started by offering free space for one month to retail pop-ups, but had limited success, so the decision was made to offer longer pop-up leases but with highly affordable rents. The model evolved into tenants paying $750/month in rent, along with 10% of sales beyond an agreed baseline.

Between 2012–2017, the Danforth East Pop-Up Shop Project saw:

• 32 pop-up shops launched
• 15 stores permanently leased
• 11 landlords’ participation (some owned multiple storefronts)
• decreased commercial vacancy rates (from 17% to just 6%)⁹

In addition, six small enterprises were incubated by the Pop-up Shops Project, including:

• Merrily, merrily
• The Handwork Department
• LEN Democratic Purveyors of Fine Art & Beautiful Things
• In This Closet (operated for three years but has since closed)
• Fa.real Custom Tees
• Looking Glass Adventures

Along the way, the organizers learned some valuable lessons. For example, programs like the Danforth East Pop-up Shop Project are best suited to neighbourhoods where storefront vacancies are 15%–20% and there is the opportunity to generate real excitement about the opening of new, local stores. An active residents’ association that took a strategic perspective of neighbourhood revitalization and focused on pop-ups as part of a larger initiative was an asset to the success of the project. Among the challenges was finding landlords willing to participate, since Toronto landlords receive a vacancy rebate for unoccupied space. Other challenges included figuring out how to work with existing retail businesses and engaging the community stakeholders in the revitalization initiative.

Art Enlivens Empty Storefronts in Seattle

For many of the early adopter pop-up programs, the arts and culture sector has provided the tenants, not the retail or artisanal sector. Storefronts Seattle, which was launched in 2010, is a case in point.¹⁰ By that time, downtown Seattle was dealing with a combination of factors that were causing storefront vacancies to escalate. A conversion of residential to commercial space on the back of the dot com boom meant that the downtown emptied out after working hours. The 2008 recession had dealt a blow to smaller businesses already struggling with the loss of a local market. Vacancies hit an all-time high of 20% at the end of 2010 and community stakeholders decided to take action.

Initially billed as a pilot project, Storefronts Seattle was spearheaded by a not-for-profit arts organization called Shunpike and the concept was to match artists and art groups with vacant storefront space. The idea was to create art installations that the public could view and enjoy through store windows, which is somewhat different from later programs that activated empty space with art galleries or studios.

In the case of Storefronts Seattle, the City of Seattle has played a constructive and supportive role, especially on a strategic level, participating in blue-sky thinking, brainstorming and working to identify economic development actions. Participating landlords made their spaces available on a month-to-month-basis, for a period of between three to six months, at a nominal rental of $1/month. Critically, tenants agreed that if the property owner secured a permanent tenant, they would relocate within 30 days – this ensured landlords did not miss any opportunities. Indeed, landlords have benefited from Storefronts Seattle directly, as 20% of the previously empty spaces were rented on long-term leases at full rents.

Artists and arts groups are required to submit a detailed proposal to Shunpike and these submissions are reviewed and selected by an independent panel. Successful projects, according to the submission criteria, are: compelling, viable and relevant.

In 2014, Storefront Seattle placed 50 individual artists in the greater Seattle area. But then things started to change. The economic climate improved, demand for space in the downtown picked up, and new development projects emerged. The net impact was that available vacant space became harder and harder to find. Storefronts Seattle is responding to the changing urban dynamic to focus on new opportunities: filling street-level vitrines in corporate offices with art displays, for example, and identifying spaces on the margins that remain unused.

Renew Newcastle Inspires a Main Street Revitalization Movement

One of the most frequently cited and widely emulated pop-up initiatives is that of Renew Newcastle, which was launched in Newcastle, New South Wales, Australia in 2008. Not only did it spawn the revival of Newcastle’s deteriorating CBD, it also inspired a movement (e.g., Renew Adelaide, Pop-up Parramatta and Renew Townsville).

The global economic recession in 2008 was a death knell for Newcastle, which was already struggling with empty storefronts and businesses relocating to the suburbs. By that time, the city centre had some 150 empty stores and no new development. Projects that had been in the pipeline before 2008 were stalled or entirely scrapped by the recession.¹⁰

Renew Newcastle acts as an intermediary between temporary creative uses and the landlord. Inspired by projects that matched artists with vacant spaces, the initiative evolved with several important differences from similar programs elsewhere in the world:

• Barriers to both the artist and landlord are actively minimized. By focusing on liability insurance, tax and accounting support, and managing operating costs, the program makes it simple for both property owners and tenants to participate. For instance, tenants sign rolling 30-day licences, rather than complex lease agreements, and agree to vacate quickly if permanent tenants are secured.
• Tenants can be private or not-for-profit. Initiatives include: galleries and studios for artists; office spaces for emerging professionals like architects; and retail space for artisanal goods.
• Everything being sold is handmade. Whether it be art or professional services, participants sell their own services or products.

Using this approach, Renew Newcastle launched 40 new enterprises and initiatives in its first year alone.

References

1. Frank, F. & Smith, A. (1999). The Community Development Handbook: A Tool to Build Community Capacity. Human Resources Development Canada.
2. Rabianski, J. S. (2002). Vacancy in market analysis and valuation. The Appraisal Journal, 70(2), 191-199.
3. Michigan Community Resources (2013). Vacant Property Toolbox.
4. Forsyth, M. & Allan, L.E. (2014). Pop-Up Program Development: Lessons Learned and Best Practices in Retail Evolution. University Center for Regional Economic Innovation, Michigan State University.
5. Smart Growth America. (2015). (Re)Building Downtown: A Guidebook for Revitalization.
6. Frank, F. & Smith, A. (1999). The Community Development Handbook: A Tool to Build Community Capacity. Human Resources Development Canada.
7. AARP (n.d.). Pop-Up Demonstration Tool Kit.
8. Gaber, B., KC, S., McLean, G., Morgan, G. & Vasic, M. (2013). Between Monarch and Main: An analysis of main street revitalization efforts in Toronto’s Danforth East neighbourhood. PLA1106: Workshop in Planning Practice, Geography & Program in Planning, University of Toronto.
   
9. Stephenson, G. (2017, August 15). The Pop-Up Shop Project. Slide presentation to the City of Barrie.
10. Cohlmeyer, E. (2013). Reimagining Vacant Storefronts: Exploring new models for the temporary use of space in Seattle, New York, Newcastle and Toronto.