All Legal Issues Must Be Considered

A leading real estate lawyer at Irwin Mitchell in London has urged landlords to tread carefully and consider all the legal issues relating to ‘pop-up’ stores and their potential for filling empty properties on the high street.

With retail space across the UK taking a significant hit as a result of the difficult economic climate and its continued impact on many companies, the concept of opening temporary outlets in otherwise empty properties has grown in popularity in recent years.

Such stores generally operate on a short-term basis, but a few notable exceptions have also seen their operations become permanent, thriving new businesses.

Lawyers in Irwin Mitchell’s specialist Real Estate team, who provide specialist advice on all issues related to commercial property, have seen a number of the ‘pop-up’ stores come and go and have advice for landlords keen to get involved.

London-based Real Estate Partner, Jon Vivian, explains: “Recent years have brought the difficult issue of empty retail space into sharp focus for many landlords, but ‘pop-up’ stores offer a range of advantages when set up in the right manner.

“For example, as well as ensuring that space is used, it also gives landlords a chance to showcase the properties they own to other potential occupiers and also allows them to cover the cost of both upkeep and maintenance.

“However, common sense is key to getting the best out of the concept and we would urge firms to bear in mind a couple of key issues related to agreeing any tenancy and potential planning implications.”

Jon outlines: “The very nature of short-term ‘pop-up’ shops is that it places landlords in a difficult position when it comes to tenancy agreements. How do they ensure that a proper agreement is in place which is fair and proportionate to the length of time the space will be used?

“A short-term lease would be feasible, but may offer some disadvantages. For example, such a document could cause issues if the property involved is being considered for redevelopment, as the occupier would suddenly have a significant level of security which could jeopardise such plans.

“In addition, a lease is often a rather extensive and can be both costly and time-consuming to prepare – not ideal for an operation which is supposed to be both short-term, immediate and flexible.

“A potential route around this issue is making use of a licence or a tenancy at will. However, the former could lead to issues related to exclusive possession if care is not taken, while the latter is often brief and not detailed enough for an arrangement which may last several months or even longer.

“The final straw in this regard is a hybrid of all of the above. Sadly though, even the smallest flaw or error during the drafting process could give the occupier more rights than was originally intended.”

He added: “This may be something that landlords forget about, but the issue of planning laws also needs to be carefully considered when you’re looking at the potential for a ‘pop-up’.

“The introduction of such a short-term operation may inadvertently infringe on regulations in relation to the intended use of a commercial property. It is also important to remember that rights in this area tend to allow for a ‘one-way change’, which means that sites often cannot be easily reverted to their original use without further permission.

“Further consequences may arise in relation to other rights for the property. For instance, it may be necessary to consider whether any other trading regulations such as delivery hours could impact on the ability of a temporary site to get off the ground.”