South Orange lays out plans for co-retail space at Taylor Vose

SOUTH ORANGE, NJ — At its July 25 meeting, the South Orange Board of Trustees heard a presentation from Deborah Engel, a creator of the General Store Cooperative in Maplewood, about the proposed co-retail space for the Taylor Vose redevelopment project, which includes a five-story, mixed-use building that will bring 110 units of housing, approximately 11,000 square feet of retail and a maximum 10,000 square feet of second-floor commercial space to the site. 

“As a part of the Taylor Vose redevelopment project, one of the community benefits agreements that we negotiated for was to be a co-retailing/co-incubator space for retailers, an idea generated by the success of the South Orange Village Center Alliance having the Pop ’n Shop, and seeing 75 different makers come together during the holidays and fill a spot,” village President Sheena Collum said at the meeting, adding that creative solutions, such as co-retail space, will help small businesses thrive in the age of Amazon.

Co-retail space is space shared by a variety of businesses to sell goods and services.

“As soon as we kind of got this idea, we immediately reached out to none other than Ms. Deb Engel because of the success that she has had operating the General Store Cooperative and also being intimately involved with our South Orange Village Center Alliance, and also working on various pop-up shops,” Collum said. “If there’s anything we know, it’s bring in subject-matter experts to show us how we can do this. So while we had the big idea, it’s somebody like Ms. Engel who can help us take our ideas to implementation.”

Engel and her GSC partner, Amy Howlett, were hired by the village to work out a plan by which a co-retail space could be effective at the site. The trustees did not vote on anything at the July 25 meeting; they merely learned about the plans for the space.

“So the mission statement of this co-retail and commuter space in South Orange is to support local and neighboring community makers, artists and small businesses by providing an experiential co-retail, incubation and community-building space,” Engel said at the meeting. “We want to make sure to reach multiple audiences and demographics from adults to middle schoolers to seniors to families and everyone in between. Since it is a community space, we want to make sure it’s everybody’s home.”

There would be four ways for local businesses to participate in the co-retail space: first, as anchor tenants, who would pay subsidized rent based on square footage; second, as vendors, who would pay a one-time application fee to onboard into the shop for a determined period of time, would give the space a 30-percent commission for each sale and would volunteer time at the space to cut down on staffing costs; third, as theme participants, paying a higher fee for increased marketing during themed promotions; and fourth, through events, with businesses hosting or sponsoring events at the space, such as an open mic night or live music.

“We have been talking to a bunch of local businesses that both currently exist and are thinking about starting, about being anchor tenants in the space,” Engel said. “One of the things we learned from our experience operating co-retail space is you really need service space anchor tenants in order to drive foot traffic.”

So far, Engel and Howlett have spoken with the Urban Cone, an ice cream truck business co-founded by a Columbia High School graduate that is looking to expand to brick and mortar; while no final agreements have been struck, Engel said the ice cream business is interested, which she also sees as a plus because it would pay homage to Gruning’s, the ice cream business that stood at that spot as a South Orange fixture for many years. 

“We are also talking to Tea & Tunes, which is an existing Maplewood business” founded by a Maplewood resident, according to Engel. Currently the store sells loose-leaf tea and records, but, if it becomes an anchor tenant at Taylor Vose, Engel would like to incubate the business with a “beverage bar,” moving the business from selling loose-leaf tea for home consumption to also selling steeped tea for consumption in the space.

Engel is also currently in talks with a Maplewood resident who is looking to create a sweets shop and a South Orange resident who wants to create a “board game cafe” as a safe space for youths.

“So, to clarify, we haven’t made deals with anybody,” Engel said. “They all have expressed interest.”

In order to keep the space going, Engel said, “the actual space needs a revenue stream of its own. It’s not sustainable to only depend on commissions from our retailers.”

Expected revenue sources include the beverage bar, which would offer nonalcoholic drinks to visitors of all ages, which could open up additional fundraising and grant opportunities from sobriety, addiction and mental health initiatives; fundraising; rent and vendor fees; event space rent; and commissions from themed quarters.

“We’d also like to launch new themes each quarter because, while the holiday season is a big retail quarter, the other seasons don’t have as much foot traffic and we really want to activate the space and use themes to create marketing opportunities,” Engel said. Current planned themes are the holiday quarter; a quarter that turns the space into a selfie museum; a quarter that highlights vintage items; and a quarter that, in homage to the fact that the site used to house a Blockbuster video store, a browsing destination with videos, used books and music, including listening booths and reading nooks.

According to Engel, the projected revenue — with “very conservative number projections” — is $157,461 for the first year. The breakdown is: fundraising, $60,000; beverage bar profit, $62,010; holiday shop commission, $10,000; subsidized rents for anchor tenants, $15,576; special event fees, $1,000; vendor application fees at $25 a pop, $1,875; themed participation, $1,000; and other three quarters commissions, $6,000.

Operating expenses for the first year, however, are projected to be $196,000, with $48,000 going to one-time start-up costs and the remaining $148,000 going to the space’s management company or executive director, an events/programming manager, beverage bar operational expenses, common area maintenance, utilities, Wi-Fi and phone, online subscriptions, and advertising.

As for one-time costs, Engel explained that the site would need to construct industrial freezers for potential tenant the Urban Cone, and she recommends that the space cover that cost, both to help support this local, minority-owned business and so that, should the Urban Cone eventually leave, the space owns those freezers and can easily rent the space to another food service.

Trustee Karen Hartshorn Hilton questioned the financial aspects of the plan.

“I’m stuck on the money — $196,000. So the village is paying that amount?” she asked.

“Correct,” Engel answered. “Because it is a village-owned property and nonprofit, you guys would be hiring a management company or an executive director to run it. That would be your cost in order to start the space, for the build-out and for the startup. It’s a projected operating loss. These are conservative numbers and our revenue could get higher, and it could get going quicker, but that would be the cost for South Orange.”

Collum expanded on that, assuring that this money would not be coming from the town’s operative budget, thanks to a 25-year Payment in Lieu of Taxes agreement with the developer.

“The financial negotiation with the developer along with the space and the rent abatement for us over the 25 years was $700,000 and a community contribution, which was for the project site or improvement to the project site, and it was anticipated that that money would be utilized to create this destination,” Collum said. “There is money earmarked; there is not money from the operating budget or tax levy. This was a part of the financial agreement with the developer, so that money is set aside for these types of costs.

“We are not looking to find the funding for this,” Collum continued, explaining that they already have the money set aside, “and the ultimate goal is that its break-even. We never expected it to be profitable.” 

According to Engel and South Orange acting administrator Julie Doran, the space is expected to be ready for retail in early fall and for residents on the top floors in late fall. Engel said she hopes the co-retail space will open in October — just in time for the holiday shopping season.

“What we’d like to do administratively is, we’ve been working with our village counsel to prepare all the documents necessary to present to you, the trustees, to formulate the nonprofit entity that then gets started to hire the management agency and get everything ready to go,” Doran said at the meeting. “We’re pretty close to being able to present you with those documents at this point, so tonight gives you an overview of what it is we’re hoping to do, and the next step will be to get the nonprofit entity formed so they can move forward.”

  FEATURED, Redevelopment, South Orange Board of Trustees, Taylor Vose, Village President Sheena Collum