Permanent vs. Temporary: Should I Stay or Should I Go?

Say a small furniture company or clothing manufacturer wants to expand its market share. While business is good, it's not quite good enough to make a major investment in a long-term lease on permanent space in one of the numerous merchandise marts located around the United States. What to do?

Luckily, the marts have a solution to this entrepreneurial dilemma: a stepping stone in the form of temporary space available several times throughout the year where exhibitors can get their feet wet before signing on for a bigger commitment.

"The temporaries are actually an incubator for the permanent showrooms," said Dana Pretner Andrew, director of marketing and public relations at the World Market Center in Las Vegas.

The WMC launched the Las Vegas Market, which focuses on furniture and home furnishings, in May 2005. It has held four shows, rotating between winter and summer, since then. The most recent one, Jan. 29–Feb. 2, marked the opening of a 1.6 million square foot building housing permanent showrooms. It joined the already existing 1.3 million sq. ft. Building A.

Each market also included temporary exhibit space — 300,000 sq. ft. for the winter editions and close to 1 million for the upcoming summer market. The temporaries have been held in a number of locations around the busy tradeshow city, ranging from tents in the WMC parking lot to the Las Vegas Convention Center and Cashman Center. Often exhibitors in the temporary space have little say in where they'll end up.

But, according to Babs Blair, World Market Center's director of leasing, it hasn't deterred them from snapping up anything they can get for the upcoming show July 31-Aug. 3 at the Sands Expo & Convention Center/Venetian Resort Hotel Casino. "We've sold all of the space so far," she said. "Moving is hard, but this time the exhibitors are excited because it's at the Sands."

In the meantime, with every market, the temporary exhibits continue to convert to long-term leases in the permanent showroom buildings. A third building, currently under construction, is already two-thirds sold out.

"In the temporaries, there are actually a lot of permanents waiting to happen," Blair said.

According to Blair, the benefits of a permanent showroom are obvious:

• more space for larger products
• year-round access for customers in a city that is an immediate draw for visitors
• no move-in and move-out timetable dictated by show managers
• more cost-efficiency over time than exhibiting in multiple tradeshows
• more opportunity to create a unique setting with light fixtures, flooring, wall hangings, etc.

In High Point, N.C., Merchandise Mart Properties owns and operates 2.1 million sq. ft. of permanent and temporary showroom space that is fully booked for all four annual markets it hosts, the Fall and Spring High Point Market, focusing on furniture and home furnishings, and the Winter and Summer Showtime Fabric Fairs, according to MMPI Vice President of Marketing Karen Olson.

"Permanent space is very stable overall because exhibitors are on longer leases," Olson said. Turnover is low, between 8 and 9 percent, which means temporary exhibitors may have to wait a while before they can put down roots in the permanents.

"The temporary space is typically the entry point for new-to-market companies," Olson said. "Many grow, expand their space or may take permanent exhibit space."

But the turnover rate for the temporaries is not all that high either — typically 10 to 15 percent.

Olson explained, "Because product display for the home furnishings industry can be very complex and expensive, many exhibitors prefer to contract for their space for a longer term in order to minimize the cost of setup and breakdown for each market and enhance their product display."

Sometimes a company is right on the verge of making a switch to permanent space, and a successful market experience can give it the confidence to take the leap of faith. Joanne Lee, director of services at the California Market Center in downtown Los Angeles, sees it happen all the time.

California Market Center, owned by Jameson Properties, holds the second-largest exhibit space in the city after the Los Angeles Convention Center. Built 40 years ago as a fashion wholesale location, it now takes up an entire city block with 1.8 million sq. ft. of permanent showroom space and another 165,000 sq. ft. of temporary space available for the 20 apparel and gift shows it hosts each year.

"Our temporaries are typically full, and sometimes there's even a waiting list," Lee said. "We've seen an increased interest in California on the whole in the last few years, with contemporary (fashion) leading the trend."

Although moving in and moving out and dealing with multiple single-show contracts can be a hassle, "we have a lot of repeat customers," Lee added.

The 75-year-old Chicago Merchandise Mart, also owned and operated by MMPI, spans 4.2 million sq. ft. Two entire floors referred to as Market Suites encompass 450,000 total sq. ft. of temporary exhibit space that's available for the 70 shows and events the facility hosts annually.

A mix of consumer and tradeshows at the center that use the temporary space throughout the year include NeoCon World Trade Fair, a three-day contract furnishing event that attracts more than 60,000 attendees every June; eight apparel industry tradeshows, including the biannual National Bridal Market; and the December consumer fine crafts show, The One of a Kind Show and Sale.

"Each industry and their affiliated shows and showrooms have full-time, devoted sales and marketing teams who are specialists in the industries," said Shawn Kahle, vice president of public relations at MMPI.

The permanent showrooms are almost always fully leased, and the temporaries for the shows are always sold out, according to Kahle. But that doesn't mean new kids on the block who want to get their feet in the door at the temporaries, and eventually the permanents, don't have a chance.

"There is a desire to bring in a mix of new exhibitors into each show," Kahle said. "This is regularly accomplished as MMPI industry experts monitor new market entrants, trends and hot prospects. In other words, there is a managed turnover (in the temporaries) that creates opportunities to keep markets and shows fresh and at the leading edge of market trends."