Pop-up shop pioneer Spirit Halloween is hitting the mall as more retailers vacate

Key Points
  • Spirit Halloween has been expanding its physical footprint for the past 15 years, adding roughly 50 to 100 shops throughout the U.S. and Canada every year.
  • In 2017, Spirit will have a whopping 1,300 temporary locations across North America.
  • As more mall tenants close their doors, Spirit Halloween is expanding its presence in their place.
An employee of Spirit Halloween models one of thousands of costumes on sale in Plantation, Florida.
Carl Juste | Miami Herald | MCT | Getty Images

Halloween isn't only a favorite time of year for kids. Many retail landlords with vacant stores also have something to look forward to.

"Because national retailers take a long time to sign leases — easily six months — tenants like Spirit Halloween tend to be a great filler in the interim," said Ami Ziff, a director of Time Equities' National Retail division.

Spirit Halloween, which first popped up in 1983, is considered one of America's first "pop-up shops." The retailer, which operates a year-round e-commerce business, has a physical retail presence for only about two months a year.

And for the past 15 years, Spirit Halloween has been expanding its physical footprint, adding roughly 50 to 100 shops throughout the U.S. and Canada per year. In 2017, Spirit will have a whopping 1,300 temporary locations across North America.

"There is always turnover in the real estate market," CEO Steven Silverstein told CNBC about his company's annual search for short-term leases. "This year there has been availability in quality real estate."

Spirit has been more "flexible" in where it is willing to open, he said. This year, Spirit Halloween will be in more malls, in addition to open-air strip centers.

"There are opportunities in all kinds of real estate that you have to consider, but the most important thing is that we are easy to find," Silverstein said. "Good locations are in highly concentrated populations."

Consumer spending around Halloween is expected to hit a record $9.1 billion this year.

More mall landlords have opened their doors in recent years to pop-up concepts, especially because a growing number of tenants are closing stores or going out of business.

Pennsylvania REIT, which owns malls and shopping centers across the East Coast, has three Spirit Halloween shops, one Halloween City and the first Christmas-themed Balsam Hill pop-up location in its portfolio this fall.

"We think there's a need for newness and uniqueness to continue to excite our customers as the days of cookie-cutter malls are long gone," PREIT spokeswoman Heather Crowell told CNBC.

"We always like pop-up, seasonally relevant tenants when we have the space, as it gives customers another reason to visit us."

According to Ziff, who has worked with Spirit Halloween, the costume and candy retailer offers landlords a "welcome" tenant who keeps the space clean, "pays on time" and "leaves on time."

"It's 100 percent a Band-Aid, but there's also an interesting parallel between Spirit's growth and the rapid rise of big-box availability," Ziff said.

As big-box tenants like JCPenney trim their store counts, landlords are seeking replacements. And the holidays tend to offer a slew of temporary options.

Throughout 2016, Cushman & Wakefield tracked over 4,000 major retail chain closures, surpassing 2015's roughly 3,600 closures. The firm has forecast that number in 2017 to increase by at least 25 percent, reaching 5,000 closures at a minimum.

So far, 19 retailers have filed for bankruptcy in 2017 — many of them apparel companies within malls, where pop-up concepts like Toys R Us Express have been temporarily filling gaps.