The pop-up that signed a five-year lease

Lena’s candle business started the way many small retailers do now: online sales, a few craft markets, and then a pop-up. A landlord on a busy Calgary retail strip had an empty unit between tenants and offered it to her for the three months before the holidays on a short licence agreement. She paid a flat monthly fee, brought in her own shelving and a cash wrap from a used-fixture shop, and sold more in that quarter than in the previous year online.

In January, the landlord’s leasing manager asked whether she would like to stay. Not for three months this time, but for five years. Lena, a composite of several shop owners I have reported on, said yes in principle within a day. It took another two months and one lawyer to say yes on paper. Here is what changed between the pop-up and the lease, and what she negotiated.

A licence is not a lease

Many pop-ups run on a licence agreement rather than a lease. A licence typically gives you permission to occupy the space for a short period, often with the landlord keeping broad rights to end it or move you, and with few of the obligations of a full lease. Costs are usually bundled into a single fee. It is designed to be quick, light and temporary.

A five-year retail lease is a different animal. It is a long, detailed contract that typically includes base rent, additional rent for property taxes and common costs, an obligation to stay open during set hours, insurance requirements, rules on signage and use, repair and restoration obligations, and, often, a personal guarantee. Lena’s pop-up fee had been simple to understand. Her draft lease ran to more than sixty pages.

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The pop-up proved the shop could sell. The lease was about whether it could survive a slow February in year three.

Running the numbers past the holidays

The first thing Lena’s accountant pointed out was that the pop-up had run in the best quarter of the retail year. A lease means paying rent through the quiet months too. They built a simple model using illustrative figures: 1,100 square feet at $30 per square foot net, plus estimated additional rent of $14, gives a gross cost of about $48,400 a year, or roughly $4,000 a month before utilities, insurance and staff.

Against her holiday sales, it looked easy. Spread across a whole year, with a realistic January-to-September dip, it was manageable but tighter. That model shaped every concession she asked for.

What she negotiated

The landlord wanted to keep a tenant who had already proven foot traffic, which gave Lena more leverage than a first-time tenant usually has. With help from a retail broker, she focused on a short list of items rather than fighting every clause.

She did not get everything. The landlord would not agree to an exclusive-use clause preventing another candle or home-fragrance shop in the plaza, offering instead to restrict a direct competitor in the immediately adjacent units. She also accepted a radius clause, which limited her from opening another store within a set distance during the term. Her lawyer made sure it did not catch her online sales or her occasional market stalls.

The small clauses that matter in retail

Retail leases carry some terms office tenants rarely see. A continuous operation clause may require you to stay open during the centre’s hours; ask what happens if you need to close for illness or a family emergency. A percentage rent clause, more common in malls, may require you to pay a share of sales above a threshold and report your sales to the landlord. A relocation clause may let the landlord move you to another unit; push for limits on how comparable the new unit must be and who pays for the move. And a co-tenancy clause, if you can get one, may adjust your rent if a key anchor store closes. Not every lease will have all of these, but you should know whether yours does.

Should every successful pop-up sign long?

Not necessarily. A pop-up is a cheap test, and one good season is limited evidence. Some retailers prefer to run a second pop-up in a different quarter, or ask for a shorter first term — two or three years — with renewal options, before committing to five. Landlords often prefer longer terms and may offer better inducements for them, so there is a trade-off between flexibility and concessions.

For Lena, five years with a renewal option made sense. The location had already proved itself, the inducements covered most of her build-out, and the guarantee was capped. Her shop opened in April after a six-week fixturing period. She still runs a holiday market stall every December, which, thanks to her lawyer, her radius clause allows.