UPDATED, April 19, 4:30 p.m.: A British startup is looking to capitalize on Manhattan’s rising retail vacancy rate by offering landlords a chance to list their empty storefronts as short-term rentals online.
Appear Here, which opened a New York office in January and officially launched here on Wednesday, has signed exclusive deals to list pop-up stores for The Blackstone Group and is also working with other large landlords like Thor Equities and Simon Property Group. A Brookfield spokesperson confirmed that the company signed an agreement to bring pop-up stores to Brookfield Place in Lower Manhattan.
“Every landlord would rather have a long-term tenant but the reality is it doesn’t exist anymore,” said the company’s founder Ross Bailey.
As The Real Deal reported in December, landlords have generally seen pop-up stores as a stop-gap measure, but some are making short-term leases a viable business. “It’s an opportunity for the landlord to capture some short-term cash,” said Jason Fein, a partner at ABS Partners Real Estate told TRD at the time. And while they continue to look for a long-term tenant, “things always show better when they’re alive,”
Appear Here functions as something of an Airbnb for retail space. Landlords or tenants can list space for short-term use and get matched with customers. The London-based company, founded in 2012, makes money by charging between 10 and 30 percent of the rent as a fee, Bailey said. It vets and photographs every space. Companies can rent spaces for as little as a single day, or by the week or month — minimum terms depend on the landlord’s preferences.
Current listings include an 8,000-square foot storefront at Jeff Sutton and Aurora Capital’s 511 Fifth Avenue asking $45,000 per day, a 50,000-square-foot warehouse in the Brooklyn Navy Yard asking $12,000 per day and a 5,000-square-foot store in the Meatpacking District asking $15,000 per day.
Appear Here recently hired Cushman & Wakefield broker Eva Santiago, who last year brokered the National Football League’s 25,000-square-foot lease at 701 Seventh Avenue, as head of special projects. The company has raised close to $10 million in venture funding to-date from investors including Balderton Capital and Forward Partners, according to Crunchbase.
A representative of a major real estate investment firm, speaking on condition of anonymity, said Appear Here is appealing to owners of transitional properties: “It may be harder to secure someone on a 10-year lease if the space is in the middle of renovations.”
Bailey argued that opening up retail spaces to short-term use increases demand and revenue opportunities for landlords, particularly with the growing spate of store closings and rising vacancies. Earlier this month, Ralph Lauren became the latest retailer to announce the closure of a major store, shuttering its 39,000-square-floor flagship at 711 Fifth Avenue. At the end of 2016, six of Manhattan’s 12 major retail submarkets had an availability rate of 20 percent or more, according to Cushman & Wakefield.
Another startup that is trying to shake up the market for short-term commercial space is Splacer, although the company focuses on event space rather than retail storefronts. In September Business Insider reported that Amazon plans to open dozens of pop-up stores in shopping malls across the U.S.
(To see our retail leasing Deal Sheet, click here)