Innovative minds in Sparta came up with a plan to reactivate the downtown shopping district and help startups, and it is paying dividends in its third year of operations.

The Sparta Downtown Development Authority (DDA), Rockford-based Baker Investment Properties and Sparta-based JNJ Investments partnered in fall 2020 to launch the Sparta Town Square Retail Incubator Project, installing four shipping containers in downtown Sparta to house “small box shops” for startup retailers that could not yet afford full-blown brick-and-mortar locations.

The concept of adding small retail spaces — each about 150 square feet — inside refurbished shipping containers began in spring 2019, when Sparta DDA entered the “Put Your Town on the Map” pitch contest at the Rural Partners of Michigan’s annual Small Town & Rural Development Conference.

Sparta pitched the concept of small, affordable retail spaces to help new businesses get started in an underutilized space in the downtown core that would serve as a catalyst for downtown retail growth and redevelopment.

Competing against nine other ideas, Sparta took third place and received a startup grant of $2,500 from the Consumers Energy Foundation.

In 2021, the Michigan Downtown Association recognized the Sparta Town Square with an award for Best Economic Development Project Under $1 Million.

“Our project was competing against all the other unique projects across the state,” said Elizabeth Morse, Sparta DDA director. “It was quite an honor to have (the retail incubator) recognized with this top award.”

This spring, the retail incubator project will graduate its third business, Sweets 4 Days Bakery & Creations , into a permanent storefront downtown just blocks away from the shipping container it currently occupies.

The other two retailers that have moved into brick-and-mortar spaces after starting in the shipping containers are Lemon & Lola Boutique and The Wild Bee , both located at 201 E. Division St.

Currently, the four shipping containers house Dottie’s Dog Bowl , Ronnie Mack’s Hotbox Hash House and Sugar Pop, as well as Sweets 4 Days until it moves to its new space.

“Sparta has made everything possible,” said Alesha Bout-Murphy, who co-owns Sweets 4 Days with Passion Ganaway. The pair opened their business in one of the shipping containers about 13 months ago.

Morse and Rex Baker, founder and agent with Rockford-based Baker Investment Properties, recently spoke to the Business Journal about the project.

The four shipping containers are situated in a formerly empty, city-owned parking lot at 177 E. Division St. in the Sparta Town Square, with Nash Creek flowing behind it and traditional storefront businesses next door at 201 Marketplace — an 8,000-square-foot building recently purchased and transformed from offices to retail space by Jim and Janet Knauf, founders of JNJ Investments.

Morse said there’s a simple reason the partners took this incubator approach to downtown revitalization: Sparta has many downtown buildings — mostly former industrial facilities — that are either vacant or underutilized, and renovating them to serve as retail spaces requires an upfront capital investment that fledgling businesses cannot afford.

She said the vacancies fit in with a larger trend dating back several years, in which manufacturers decamped to the outskirts of small villages where land was cheaper for them to expand. In doing so, they left behind buildings unsuited to house other businesses.

The small shops in the shipping containers — owned, installed and managed by Baker Investments — offer new businesses the opportunity to start and grow their retail concept affordably in an area with high foot traffic. With short-term leases, typically one year and costing about $300-$350 a month, the new businesses can evaluate the market demand for their product with less financial risk, then take the next step to a permanent storefront when their revenue allows, Morse and Baker said.

While there is nothing to prevent the retailers from renewing their leases for a second year, ideally, they will have grown enough by then to move on, the partners said.

“We have a lifespan on that where that business would either move to a brick and mortar in a successful manner, or maybe they just shift gears and do something else,” Morse said. “It’s not meant to be their home forever. It’s 150 square feet; it’s just not going to work forever.”

Baker and Morse said as part of the incubator project, the partners connect the startups with resources to help them grow, including introducing them to the Sparta Chamber of Commerce and/or to business mentors.

Morse said she is pleased to hear what it means to these small retailers to be given a shot at success.

“We’ve heard the stories (from retailers) … where the only available space in Sparta to open a business was in the outskirts of town in a strip mall, and their rent was somewhere near $2,000 a month, and they would invest their whole 401(k) or retirement plan into opening this business. They could operate for four or five months (but) didn’t have enough capital to sustain getting into the swing of things, and then they went out of business,” Morse said.

“(That’s) not great for Sparta, because now we see another failed business, which nobody wants to see. … These are intentionally cheap rents, so that someone can test our market fairly inexpensively, maybe moving from the tent at a craft show or a basement-style business with an online presence and give them that first feel of doors that open to the public.”

Added Baker: “Our goal was to help retail businesses get started, and it’s working extremely well.”

The Knaufs were eager to host the shipping containers adjacent to their property and allowed the village of Sparta to lease the restroom facilities in 201 Marketplace — which have an exterior-facing door — as well as allowing access to the newly installed outdoor seating overlooking Nash Creek, to accommodate the influx of employees and customers visiting the burgeoning shopping district.

The shipping containers have been made more homey-looking with decking, signage and flower planters installed around them, so they don’t scream “shipping container,” Baker said.

“Looking at the before-and-after pictures of the area from three years ago, it’s amazing the change that can happen in a small community with several partners working toward a common goal,” Morse said. “These shops are cheerleaders for each other and a wonderful support system. The more established brick-and-mortar businesses adjacent to the shops in the shipping containers all work together for the good of growing the Town Square and (the core of) downtown.”

Morse said Sparta now has enough shopping activity that it needs more parking spaces.

“We’ve never had a parking problem before in Sparta,” she said. “That’s a huge sign of success for a small downtown, when there’s demand on the parking spots because people are coming here and stopping and shopping and eating. That’s an awesome problem to have.”

Baker said he has received approval to install two more shipping containers in the Town Square, which he hopes to do in late spring.

More information on Sparta Town Square is at spartachamber.com/small-business-incubator .