Commercial landlords in Hong Kong are allotting more space and leases for pop-up events in an effort to diversify their tenant mix and to keep foot traffic going at a time of much reduced retail spending in the city.
Qi Feng Capital, which owns the “Ginza style” V-Point building in Causeway Bay, for instance, is planning an event that will bring together eight to 10 streetwear brands and collectors next month, after the success of a similar event in November last year.
“In about five weeks, those retailers recorded six-digit sales. Meanwhile, the pop-up helped us attract more spenders and create a bustling atmosphere,” said Timothy Li, partner and chief operating officer at Qi Feng.
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As opposed to traditional leases, which usually require longer term contracts that range from two years to five years, pop-ups only require retailers to pay a fixed rent for a couple of months. The facilities fees can also be split among the retailers that take part in such events.
Named after Tokyo’s famed shopping district, the term Ginza style is used by real-estate agents to refer to commercial properties shared by many different businesses. The term was coined when sky-high rents for street-level shops forced stores in Hong Kong to move upwards, where space was more affordable.
Before the protests in 2019, occupancy in such buildings could reach 95 per cent and monthly rents could reach about HK$60 (US$7.74) per square foot. Rents have since fallen by 30 to 40 per cent. In Causeway Bay, the rate was less than HK$40 per square foot as of September last year, commercial brokerage Midland IC&I’s latest data shows.
“Retailers’ willingness to open new stores is quite soft these days,” said Helen Mak, senior director and head of retail services at consultancy Knight Frank. “If your space is vacant that means no one is coming and the atmosphere will die down. The worst is that the entire building will be easily forgotten in the market. With pop-ups, at least you still get people coming in and out. A couple of months’ long leases for a pop-up event are the new trend.”
V-Point sits a block away from the bustling Time Square shopping centre and Russell Street, once the world’s most expensive shopping avenue. Last year’s pop-up has succeeded in attracting some potential tenants to the building’s second floor, which hosted the event.
“When the space is empty, potential tenants feel that it is not bustling. We feel that we should try our best to make some noise, to give the market an idea of what our building could offer,” said Qi Feng’s Li, adding that themed pop-up events gave the company just that opportunity.
It plans to use the entire fifth floor, about 6,000 sq ft, for the pop-up next month.
“Of course, rent is always what we are looking for. However, since it is almost impossible to find a new tenant that can offer us a relatively high rent at this moment, we rather use the space to build up our brand. So that more people are aware of us and we can maintain a premium when everything is back to normal,” Li said.
Ginza style commercial buildings are usually located in relatively small single blocks. They sprouted across Hong Kong, especially in tourist districts such as Causeway Bay and Tsim Sha Tsui, during a boom in tourism to satisfy demand in a city famous for its shortage of space.
“If the landlords had a choice, they would not do this. However, they have to embrace such pop-up and temporary arrangements in the absence of being able to secure long-term tenants,” said Oliver Tong, head of retail at JLL in Hong Kong. “It is better than being vacant.”
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