Vast, open-plan communal work stations fashioned out of railway sleepers. Marker pens strewn across the bathroom sink, ready for anyone who wishes to indulge a burning desire to doodle on the mirror.
Walls, doors, light boxes and windows emblazoned with slogans including “No Bullshit”, “The Smoking Room” and “Space for Ideas”. So far, so start-up.
Welcome to Appear Here, the pop-up retail venture founded and run by 23-year-old entrepreneur Ross Bailey (pictured right). Despite first impressions, it is not one in a long line of innovative young companies that the real estate old guard is finally conceding they might do well to keep half an eye on.
Because there is nothing half-hearted about the way the UK property sector is looking on as the fledging company tears through the industry with a 500% year-on-year growth rate. Add to this the fact that the start-up has delivered some of its property clients 100% returns and 90% occupancy on their space over the past 12 months and it is clear that Appear Here is proving the power, and profits, of pop-up.
Link landlords to retailers
The concept is simple: an online site that links up landlords sitting on empty units with retailers looking for pop-up space. It has seen 10,000 brands and 750 property companies sign up in just two years. The roster includes global superbrands Marc Jacobs, Coca-Cola, Net-a-Porter, Google, Bentley, Adidas, Jamie Oliver and Dove as well as well-known landlords British Land, Land Securities, Hammerson, Capital & Counties and Soho Estates.
To handle the start-up’s exponential growth – the company now closes an average of 100 new deals every 20 days, was responsible for launching 650 pop-ups last year in London alone, and secured £4.7m in its most recent funding round in November – Bailey is growing his team. Staff numbers have already rocketed from four to 35 in under a year.
And while he is not actively looking to bring in anyone with a property background – “I think our naivety has been a big part of our success; it means we can act on gut instincts” – Bailey’s most recent hire certainly caught the industry’s attention.
Peter Lennon (pictured left), a former managing director of investment giant Blackstone, joined Appear Here in March to head up global landlord partnerships. Naturally, this saw interest in the company pique even further. Why on earth had a senior executive overseeing a $10bn (£6.8bn) portfolio at one of the world’s biggest global investors packed it all in to join a two-year-old start-up?
It is a question that Bailey himself is happy to ask – mock interview style. “Tell me, Peter…” he says in Appear Here’s vintage crate-filled board room: “Did you have any reservations at all about leaving an incredible job at Blackstone and an amazing Mayfair office to put all your trust in a 23-year-old and come and work on a desk made out of a plank of wood?”
“Well, I was never much of a fan of wearing suits to work anyway,” laughs the 32-year-old San Francisco-raised Lennon. He adds that the move was, in part, down to instinct. “I have seen a lot of US start-ups launch and I have been watching this company for a while now. What they are doing is very powerful. It could be huge,” he says.
And he is not the only one who has been prepared to stake a successful career on that prediction: “We have made a few major hires recently,” says Bailey. “People have left massive jobs to work here – H&M’s head of menswear, Nike’s head of marketing, luxury mobile group Vertu’s head of concierge.”
Retail revamps
The group – which now operates in 10 major cities in the UK – has not just made headlines with the calibre of its 35-strong team. In March 2014 Bailey partnered with Transport for London to revamp Old Street tube station. Within just four weeks 15 spaces had been made available and Bailey had closed deals with major brands including Moleskine, Tate Modern and electric bike shop Fully Charged. By May the station was unrecognisable. And it has been these sorts of high-profile retail regeneration projects that helped capture the eyes of some of the UK’s best-known property developers in the first instance.
Appear Here’s success so far has been so dramatic that it is kickstarting a complete about-turn – even among the more traditional landlords – regarding pop-up retail space.
“Depending on the location and the brand taking space, through our site landlords have been getting 50-100% returns on otherwise empty spaces and they are able to keep them occupied for 80-90% of the year,” says Bailey. “We went out and made sure we got the best locations – from Burlington Arcade to Boxpark and from Dover Street to South Molton Street. These are some of the best retail streets in the world and they are attracting the types of tenants that developers might not be able to get otherwise.
“Up until now the major issue was getting these big landlords online. Pop-ups have been viewed as the rough side of retail. Now they are seeing the value. For some it has been a massive revenue stream. For others it has been a big deal floater or about getting the next best brands into their spaces before anyone else. Restaurant and food brands have done amazingly well through us, to the point where I believe that 50% of all the concessions in the Selfridges food hall were launched through Appear.”
Lennon adds that the site is set to take the service further by offering developers the sort of real-time data that Appear Here claims is not currently available anywhere else: “These guys have traditionally been working off massive spreadsheets,” he says. “We are now able to give them pretty much real-time data and information on the market. And this is important when you are looking at leases that work for pop-ups.
When you are taking five-, 10-, 15-year leases, things like seasonal changes are totally irrelevant. But with very short leases you need to start paying attention to peak times and how to price space during the holidays. And we can help with those sorts of things, because we can see through our website what that demand curve looks like throughout the year.
“We are making a process that was inefficient, efficient and creating a system where short-term leases can become a long-term strategy. Pushing towards shorter and shorter lease terms is how some of these sites stay relevant from a landlord perspective and it is obviously a less risky proposition for the tenant. Landlords can use us for access to data that won’t just make them ask, ‘What brand should I be attracting?’ but also, ‘What building should I be buying to attract the best brands to get rental increases, to get better yields?’ Real-time data like that has never been available before.”
“And it really is real-time,” adds Bailey. “On average it takes three to six months to close a retail real estate deal. Last month 50% of all of our deals closed in 48 hours. One closed in two. That was from the brand finding the space on the site, paying, and both parties signing.”
Despite such tangible successes, questions have been raised as to whether Appear Here is a true disruptor. But Bailey and Lennon are well rehearsed with responses to accusations that they are not doing anything that retail agents do not already have covered. “People misinterpret what we do,” says Bailey. “We are not agents. We never go out to meet the brands. We facilitate the connections and the ideas but the deals are done between the two parties simply and via an online portal. We don’t oversee negotiations. Because there are no negotiations.”
Online-only companies
And you do not get much more disruptive than helping online-only companies bring their brands to life in physical stores – a trend very much part of Appear Here’s future strategy.
Bailey is convinced that the entire nature of online retail is set to change: “When you have brands like Google and Spotify looking for short-term pop-up stores to market their online presence, you have a scenario that could change the nature of what a retail store actually is.”
The goal is that such ambitious plans and working with these big brand names will propel Appear Here forward as it gears up to expand in cities across the UK and, eventually, around the world.
Initially Bailey and Lennon won’t be drawn on much more detail on the international expansion plans. But as one of the work stations along the giant wooden railway sleeper happens to be occupied by Julien – a chap visiting from Paris – there is not much they can say to deny that sights are set across the Channel. “We are looking to expand into big, metropolitan retail cities and we hope to have two open by the end of the year,” says Bailey. “We want the first one to be up and running by the end of the third quarter. Will it be Paris? I hope so.”
In the interim there is plenty for Bailey, Lennon and the rest of the Clerkenwell-based team to be working on. One major priority will be to help landlords launch new brands in their empty space before anyone even knows how cool they are. “We know which brands have huge Twitter followings, which retailers have got the right ideas to really work,” says Bailey. “We say no to about 90% of the ideas that come to us because we only want to be facilitating the launch of the ones that will succeed. This means landlords will have access to some of the best-known brands in the world – and to the ones that will be world firsts.”
Anyone who is unconvinced should keep half an eye on the roof of Old Street station in the coming weeks. And maybe pop up there for a burger soon…
