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Maximizing Commercial Real Estate for Pop-Ups

Oscar R. Rivera
January 20, 2025

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In commercial real estate, “pop-up” shops have emerged as popular short-term or temporary tenants in retail spaces. Originally, “pop-ups” referred to seasonal retailers like Halloween costume stores or holiday decor shops. Today, pop-ups span a broader range of commercial leasing opportunities. They include retailers aiming to capitalize on a specific season or event, businesses testing new products or markets, and even online-only brands experimenting with physical storefronts to evaluate their commercial real estate viability.

Commercial Real Estate Pop-Ups: License or Lease

As pop-ups become more integral to the commercial real estate market, landlords and tenants face a critical decision: should they document the arrangement through a lease or a license? In commercial leasing, understanding the distinction between these options is essential. A commercial lease provides an exclusive, possessory interest in the property, offering tenants a range of protections under landlord-tenant laws. On the other hand, a commercial license grants only a contractual right to operate on the property without the protections that come with a possessory interest.

Landlords in commercial real estate often favor licenses for pop-ups and short-term tenants. Unlike leases, licenses are not subject to landlord-tenant laws, allowing landlords more flexibility to terminate agreements quickly. Commercial licenses also streamline the drafting and negotiation process, making them more cost-effective for short-term commercial real estate arrangements.

However, some tenants lean towards leases for added security. A lease affords a tenant in commercial real estate more substantial legal protections, particularly in states like Florida, where self-help and lock-out rights are prohibited in lease agreements. If a tenant defaults, landlords must pursue judicial eviction under a lease rather than resorting to immediate lockouts. For tenants in commercial spaces, this creates a more stable arrangement.

Choosing between a license or lease depends on various factors in commercial leasing: the specific needs of the pop-up tenant, the landlord’s objectives and the unique commercial real estate environment. Both options offer distinct benefits, and each should be carefully weighed to determine the most advantageous choice for short-term retail use in commercial spaces.

Understanding these distinctions and their impact on commercial real estate terms is essential for landlords and tenants to structure successful pop-up agreements.