Low-Cost Pop-up Shops Create Big Value in Muskegon, Michigan

Sometimes, all it takes is a little push to get a big thing rolling. That's what Muskegon, Michigan learned when they invested in low-cost, small-scale business spaces in their downtown.

An aerial shot of the row of chalets at Western Market

Like many American cities, Muskegon (population 38,000) chose to bulldoze much of its historic downtown to build a mall in the 1970s. Then in 2001, a new mall was constructed on the outskirts of the city, which led to the closure of the downtown mall. It's a dark story of waste and decline, but one piece of good came out of that: downtown Muskegon is coming back. The farmers market is booming and local businesses are coming up in the town center.

One small but very impactful way that the city of Muskegon has helped to make this happen is by constructing low-cost "chalets" on a vacant strip of land in the downtown dubbed, Western Market, and renting them to local businesses.

Building off the success of its popular farmers market nearby, the city of Muskegon decided to use a similar small-scale approach to create more long-term opportunities for local businesses. The city hired a builder to manage the construction of 12 wooden buildings ranging from 90-150 square feet at a cost of just $5,000-6,000 per chalet. Their simple design — a portable wooden structure with windows and doors (but no running water) — kept them very affordable. In May 2017, these buildings opened for business — filled with clothes, gifts, crafts and food. (See the photos below for a peak at some of the store interiors and owners.)

They have been a serious success, appealing to tourists and residents alike, and they stayed open well into the holiday season before shutting down for the winter. Now the city is in the process of constructing five more chalets to open later this year. The waiting list for business owners who hope to rent these spaces is already more than 25 names long.

To build the initial 12 structures, the city secured donations from the local chamber of commerce, a community foundation and other area organizations. But after that success, the value has been clear enough to residents that it makes sense to use municipal funds for construction of the new chalets, says Frank Peterson, City Manager of Muskegon and originator of the idea.

The chalets decked out and doing a roaring trade for the holiday season

The chalets have not just created initial opportunities for new businesses, they are also helping existing businesses grow and helping developers to fill permanent storefronts. Peterson explained that as new mixed-use developments go up downtown, the owners have struggled to find commercial tenants that were either a) able to afford the rent on a typically-sized first-floor storefront, or b) willing to take a leap on a downtown space with little commercial activity around it.

The chalets have changed that by activating the downtown area and allowing local businesses to test things on a small scale before renting a permanent storefront. One popular bakery which began its Muskegon operations in a chalet is now opening its own permanent downtown storefront (although they've decided to keep their chalet spot as well because of its success). Peterson also shared that some downtown developers are now choosing to build smaller spaces on the first floors of their new constructions because they have seen how that "micro-retail" size accommodates businesses more effectively.

Frank Peterson has a few tips for other communities looking to take on a small-scale, low cost initiative like this one:

1. Offer something unique. In reviewing the applications of businesses who want to rent the chalets, Peterson stresses, the application committee chose a diversity of businesses that would offer unique items for visitors and residents, not the sorts of things you could just purchase online or at a big box store. This ensured that the space would attract shoppers and keep them coming back for more.  

2. Build unity among businesses. As part of their rental terms, the businesses who occupy the chalets agree to maintain regular hours consistent with their neighbors. This keeps the downtown active at times when it might otherwise empty out and it also creates a lively street where shoppers can check out several stores in one visit. Peterson says that the city really wanted business owners to feel that "they sink or swim together." He mentioned that business owners now feel comfortable asking a neighbor to mind their shop if they need to step away briefly, and the proximity of the buildings facilitates that as well.

3. Grow incrementally. The step-by-step growth of this initiative has been key. Starting with a few simple, affordable chalets meant a low risk for the city and the chance to scale up as the project succeeds. "We don’t want to put up 20 [chalets] tomorrow," says Peterson. "We want to keep adding them a few at a time." The portable nature of the chalets also means that down the road, if they're no longer needed or the space is transformed for another use, they can easily be sold off or moved to another location that could use a small business boost. 

Nearly every town has vacant space and eager small business owners looking for affordable store fronts. Put the two needs together and you have the perfect opportunity to kickstart the local business community in your city.

(All photos from Western Market Facebook page)

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