Atlantic City's Playground tests pop-up leases

ATLANTIC CITY - The Playground, developer Bart Blatstein's mall-entertainment complex on the Boardwalk, is testing pop-up leases to attract new retailers as the moribund mall gears up for the summer.

Up to a dozen storefronts are now available for the short-term, innovative pop-ups, Blatstein said Friday, and are intended to give smaller retailers a chance to "take their shot" at space they normally could not afford. It's also a page from Blatstein's playbook at the Piazza in Northern Liberties.

"Pop-ups are done in Manhattan and New York all the time," said Blatstein, CEO of Tower Investments Inc. "Retailers have been doing them in the malls, and chains have been doing them to test new ways of doing things with retail.

"It's not just the large companies doing them, but also small businesses and start-ups to take their shot without costing an arm and a leg and a major commitment," he said. "We did them at Northern Liberties and it worked well. It keeps it fresh and changing."

But pop-up leases - where a retailer gets a temporary lease on space, usually for one to six months, to test whether his or her store has traction with shoppers - are not foolproof.

The concept was tried at another struggling shopping center - Suburban Square in Ardmore - over the winter and had mixed results.

Three pop-up shops joined Suburban Square's roster - Duke & Winston, ellelauri, and Vineyard Vines - in November, and none signed on for a permanent lease.

"All three enjoyed a brisk holiday shopping season at our center and may return in the future," said Nina Rogers of landlord Kimco Realty Corp.

In the year that Blatstein has owned the Playground, which he acquired from Caesars Entertainment Inc. for $2.5 million last April, it's been undergoing a $50 million renovation.

He opened T Street - a row of bars and restaurants on the lower level - last July. Wav, a Las Vegas-type nightclub, opened recently at the back end of T Street. Blatstein plans to break ground on a bowling alley on the second floor this summer.

And, of course, he's been adjusting the retail roster. While restaurants also occupy the third level, shops line the first and second floors.

Blatstein said the site has gone from 40 percent occupancy to over 75 percent since he took over. He said he aims to be at 100 percent occupancy by year's end.

He said the mall has gone from losing millions a year to where it's now "in the black by millions."

"It's doing great," Blatstein said. He declined to give specific sales numbers.

Some observers say his attempt to remake the Playground as a destination unto itself has fallen short due to circumstances beyond his control. The mall still suffers from a lack of foot traffic - especially in the winter - and parking.

"There will be a learning curve that may mean it could take a couple of years until [Blatstein] finds the right product mix to offer," said Michael Busler, a finance professor at Stockton University. "His idea of pop-up leases is probably a good one. These require low capital investments, can be quickly erected and dismantled, and they can quickly diversify the products being sold in the mall."

Brandon Dixon, chief operating officer of Tower Investments, charged with overseeing the Playground's overhaul, said the mall tested a few pop-ups last summer and they were successful. At least one pop-up that was part of the mall's experiment is staying.

Casey Zeck, 26, store manager at Zane Western Apparel, which sits next to Monkey Bar on the first level and a stairwell to the upper levels, said the retailer just signed a one-year lease.

"We came at the tail end of last summer, and it was very busy," she said last week. "Sales were good. Everyone is in Atlantic City in the summertime."

Garrick Brown, vice president of retail research for the Americas at Cushman & Wakefield, said pop-ups have become an important part of the retail landscape.

He said more landlords are embracing them, as well as department stores that are trying "store within a store" pop-ups.

"Before the [economic] downturn, these were almost exclusively about seasonal retailers," Brown said. "Now, we still have the seasonal players, but pop-ups increasingly act as incubator space for new retail concepts.

"In an environment where we see greater encroachment from e-commerce, this has emerged as one of the most viable ways for new retailers to test new concepts, new ideas, and new locations."

Atlantic City, which is on the brink of bankruptcy and caught in the middle of political wrangling among Trenton heavyweights on how to best deal with its financial crisis, has been trying to diversify its economy. Four casinos closed in 2014.

"A.C. needs non-casino attractions, since the casino market has seen about a 50 percent decline in revenue in the past 10 years," Busler, the finance professor, said. "Studies show that vacationers like to be entertained and they like to shop."

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