Vacant real estate: Spirit Halloween’s favorite haunt
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Vacant real estate: Spirit Halloween’s favorite haunt
Like clockwork, the pop-up chain Spirit Halloween rises from the grave to take over vacant retail stores this time of the year, selling costumes and decor for the season.
While the pandemic has shuttered some retail venues, Spirit Halloween has grown, with 3% more stores in 2021 than in 2020, according to Axios.
The pop-up chain is operating 1,425 stores throughout the U.S. and Canada this year, and has even taken over the original Barneys on Seventh Avenue in New York City.
Driven by pent-up demand, Halloween spending is expected to reach a record $10 billion, up from roughly $8 billion in 2020, according to the National Retail Federation.
Short-term leases
Spirit’s seasonal ubiquity has inspired memes featuring the store’s grim reaper banner on landmarks like the Colosseum and the White House. Because they’re renting out these locations for only a short period, Halloween retailers can often score good deals, Marketplace reported in 2015.
Spirit said it looks for a three-month lease to set up its stores, scouring locations between January and August. Its shops are open from about Labor Day through Nov. 1.
“Stores have been struggling, and there is probably more empty real estate than ever. So it’s great for anybody that is in a Halloween business,” said Sucharita Kodali, an analyst with Forrester.
Party City said it planned to open up to 100 Halloween City pop-ups this year, which is quadruple its count from last year (but a decline from 2019).
Kodali said in the past, a lack of real estate openings meant you would have to sign a really long lease.
“But between the internet and stores closing, the Halloween pop-up has essentially been given oxygen,” she said.
Kodali said COVID-19 pushed store closures further along, although they had already been on the decline. She pointed to the Great Retail Apocalypse of 2017, when thousands of stores shuttered and several retailers declared bankruptcy (including Toys R Us and Payless).
Jonathan Miller, president of appraisal and consulting firm Miller Samuel, said “excess retail” has been an issue for the last five to seven years.
He said this is partly because more people are ordering products online through sites like Amazon. And on top of that, he said, consumers had about 14 or 15 months to get used to ordering online because of the pandemic.
Pop-up business model
Catherine Loy, senior vice president and director of specialty leasing at JLL, said the pop-up business model has become more popular over the last few years. Established corporations, looking to market their products, have been responsible for many of these temporary stores.
“The pandemic made it even more attractive, because of the nature of it. You pop up and do what you need to do,” Loy said, noting that you can establish your business without the long-term commitment and financial risk.
Retailers that normally haven’t thought about pop-ups as a business model are now considering it or have started their own, she added.
Loy said that when there are a lot of vacant storefronts, you would expect the property’s average rent to go down. When you’re comparing a long-term lease with a short-term agreement, she said that the short-term agreement will have less risk.
However, if everybody wants their pop-up to be in the most attractive location, that would drive up the rate, she noted.
Kodali of Forrester said with the rise of the internet, the “overstoring” of America and Spirit’s success, we may see more pop-ups geared toward holidays such as Christmas.
“There are probably five or six other seasonal moments that you can also capitalize on that don’t overlap with Halloween,” Kodali said.
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