UPDATE: Information from Cluck-U Chicken has been added to this story.
By Tyler Barth and Kevin Coughlin
At a packed public meeting last June, the spokesman for the proposed M Station office redevelopment pledged an “unprecedented effort” by the developer to help relocate Morristown businesses that will be displaced by the project.
Eleven shops and restaurants in the soon-to-be-defunct Midtown Shopping Center must clear out by the end of March 2020.
So far, the Morris Pizzeria has announced a future home, on South Street at the former site of Boutique 161. The L.A. Perfection Nail Salon has told customers it’s moving to Martin Luther King Avenue. Cluck-U Chicken says it may have good news soon. Panera Bread is heading to Whippany.
Some other tenants say their prospects aren’t so rosy, and they have yet to see much help from their landlord, Scotto Properties, or from Scotto’s M Station partner, SJP Properties.
“We never heard anything from anybody,” except for an early December letter from Scotto with the spring lease termination date, said Peter Rizzo, a partner in the Burger King franchise where he has worked since it opened in 1979.
Jon Lin, owner of the Midtown Wine Merchant, said the only assistance he received after getting his lease notice was names of two realtors.
“That was the only help we got,” Lin said. “Is it that hard to give the name of two realtors way before that?”
The developers — scheduled to appear before the town council at 7 o’clock tonight, Thursday, Feb. 13, for their official designation as M Station’s redevelopment entity — say they have reached out to tenants and remain willing to help them.
Statements to the contrary, they contend, are a “patently false…divisive” attempt to undermine the project.
“While it would be unfair to the retailers to prematurely discuss the details of leases that are not completed, we know that, fortunately, many tenants are making positive progress in their discussions and negotiations for new locations,” Scotto and SJP said in a joint statement to MorristownGreen.com.
“We are sensitive to the questions and concerns expressed by some about the fate of these retailers, and have taken many proactive steps to facilitate their transition to new locations,” the developers said.
Starting more than a year ago, they said, “every retailer impacted by the development has been contacted on numerous occasions about the site’s potential redevelopment, and all of them have been offered information, assistance, and support.” (The full statement appears at the bottom of this story.)
Approved last fall by a unanimous council vote, M Station will consist of nearly 400,000 square feet of offices in two multi-story buildings, with ground-floor retail, a five-story parking deck, a pair of plazas, a tree-lined promenade, and a traffic “roundabout” at the intersection of Morris and Spring streets.
Big Four accounting firm Deloitte has been announced as the anchor tenant. Construction is anticipated to take at least 18 months.
Scotto and SJP Properties have pitched M Station as a magnet for good jobs, a boon for area businesses, and a fix for traffic snarls.
Opponents have warned it will hasten gentrification, striking a blow to low-income residents of the Second Ward who can’t afford pricier dining options. The Midtown Shopping Center also has one of Morristown’s last free parking lots.
Town officials noted this project was no secret– back in the early 2000s, the town designated the strip mall for redevelopment. And four months’ notice of termination is more generous than the 60- to 90-days notice in most leases.
“We have helped. We’re willing to do more. Whatever these tenants need, they should be reaching out to the Scottos,” said Frank Vitolo, attorney for M Station.
When residents voiced concerns last year about losing affordable eateries such as Macho Nacho and Cluck-U Chicken, and the convenience of Molnar Pharmacy, Vitolo gave a “personal promise” of an “unprecedented effort to keep any retail that wants to remain here, here.
“That’s happening, and it will happen. And I assure you of that. That’s going to happen. Because I live here, too,” Vitolo said at the time.
At Tuesday’s council meeting, First Ward Councilman Robert Iannaccone labeled the relocation assistance “disappointing.”
Town Administrator Jillian Barrick defended Scotto–asserting the landlord even hired an engineer to help a tenant assess another location–and she praised behind-the-scenes work by the Morristown Partnership, a downtown business organization.
However, Barrick also voiced frustration with the developer.
“I think that there should have been better communication with the town as far as the timeline,” she said at Tuesday’s council meeting. ““I continue to express to the property owner and developer that they need to communicate better with us, so that everybody understands what’s going on with the property.”
Jennifer Wehring, executive director of the Morristown Partnership, said “active negotiations” for relocations are occurring. She declined to share details, explaining she did not want to say anything that could harm such talks.
The plight of Midtown Shopping Center restaurant owners and employees, in a town where prime business locations are coveted and costly, continues to worry some longtime customers.
“Is the town doing all it can for these merchants?” resident Ken Hoffman asked council members on Tuesday. “The small-town appeal of Morristown is going fast and most residents and small merchants do not want it to change.”
A Molnar customer named Melody said on Wednesday she is rooting for the pharmacy to find a new home.
“They’re old-school. They take care of you, like you matter,” she said of the staff.
Panera Bread, a tenant at the Midtown Shopping Center for eight years, will close its doors on March 8.
All 20 employees will move next month to a new shop on Route 10 in Whippany, said Pierre Solomon, general manager of the Morristown Panera. Some of them may end up at another Panera scheduled to open next year in Morris Township, across Hanover Avenue from ShopRite, he said.
Marvet Yassin, who opened the Green Life Market health store at Midtown three-and-a-half years ago, said she wishes there was more time to nail down a new venue.
“You can’t just go and open a new location overnight,” she said, behind windows plastered with “Closing Sale” signs. “You have to make sure the town’s going to let you open a grocery store, you have to build a kitchen, there’s so many things.”
Andres Hernandez has worked at Cluck U-Chicken since 1995. He said the restaurant’s 20 employees are keeping their fingers crossed.
“Every customer asks, ‘Where are you guys going?’ I can’t say till I know. We have to wait until something comes up…or not,” he said.
His boss, Neil Goldrosen, said Cluck-U soon may have a new home, within walking distance of the storefront it has occupied since he opened the business in 1993.
Although prior discussions with Scotto Properties about moving Cluck-U into the empty former
Cy Drake Locksmiths Cy’s Brakes building, behind the Morristown Diner, fell through, Goldrosen said he’s optimistic.
“We’re going to be in town, definitely in town,” he said.
Meabwhile, the clock is ticking at Top’s China, a Chinese restaurant. The landlord showed the owner a storefront on Speedwell Avenue, but it lacked parking, said employee Shelly Chen.
“We’re still trying” to find someplace, Chen said.
Peter Rizzo has not given up, either, though he knows it’s a long shot that Burger King will find a Morristown location that can accommodate a drive-through window, which he said accounts for upwards of 60 percent of his business.
“We’ve got customers telling us where to go,” Rizzo said. “This is the only place in town with free parking. People used it.”
Statement from Scotto Properties and SJP Properties:
We are making exciting progress on the proposed M Station project – most recently with the announcement that Deloitte has officially signed a lease to be the anchor office tenant for the project’s first building. At the same time, we continue to engage in discussions to support the relocation of existing retailers of the Midtown Shopping Center, both with the town and with the retailers themselves. We are sensitive to the questions and concerns expressed by some about the fate of these retailers, and have taken many proactive steps to facilitate their transition to new locations.
The fact is, starting more than a year ago, every retailer impacted by the development has been contacted on numerous occasions about the site’s potential redevelopment, and all of them have been offered information, assistance, and support. It appears that misinformation is being spread in an attempt to undermine the M Station project – actions that are divisive and unfair to residents and the community at large, who deserve to know the truth. Public statements implying that retailers did not get help from the property owners/developer are patently false.
The facts are as follows:
- Retailers of the Midtown Shopping Center have known for years that the site lies within an area slated for redevelopment by the Town. Scotto Properties has been transparent with all tenants that the property would likely be redeveloped, and that redevelopment would mean that tenants would need to find alternate locations.
- Every existing retailer of the shopping center had a lease that naturally expired over the last few years, with Scotto granting short-term extensions upon lease expirations that included a hard lease end date of 12/31/2020 – a date that was chosen to provide the town and the redevelopment team with some flexibility around the timeline for approvals for the proposed redevelopment plan.
- Scotto intentionally did not push tenants to market rental rates at the time of their most recent renewals in order to offset retailers’ risk as it relates to the proposed redevelopment. Midtown Shopping Center rents are in the mid $30’s per square foot (psf) while Morristown retail rents overall are in the mid $40’s psf.
- Each lease renewal contained language allowing the Landlord to “recapture” the tenant space for the explicit intent to redevelop the center if the redevelopment needed to begin before 12/31/2020. Multiple times during each renewal negotiation, every tenant was told that there was progress being made on the redevelopment, and that there was a strong likelihood that there would be an imminent start to the redevelopment in advance of lease end dates. Additionally, each tenant was explicitly advised not to wait for the start of redevelopment activities to identify alternate space.
- Most of the short-term extensions signed with retailers allowed the landlord to recapture the space with either 60 or 90-days advance notice (terms that retailers clearly agreed to). The notice to vacate by the landlord to retailers ultimately provided retailers with 120 days advance notice, exceeding what was required by most leases.
- Scotto, in coordination with SJP Properties, has had numerous conversations with every tenant, and gave most tenants advance warning by several months that the recapture notice would be sent in November or December of 2019.
- The Morristown Partnership has been communicating on a regular basis with the shopping center’s tenants. The Morristown Partnership has been working to match center tenants with landlords and spaces, which has resulted in warm introductions for multiple tenants with landlords that have available space.
- The development team also went above and beyond to engage retailers in discussions about potential alternative locations where the likelihood of the redevelopment plan being approved was discussed explicitly, and offers to assist were repeatedly made:
- Morris Pizza has found an alternative location and signed a lease on South Street in Morristown. Morris Pizza has already posted a sign indicating that it will be relocating to this new location.
- Scotto offered several tenants the opportunity to exit their leases early, at no penalty, if they found alternate space prior to their forthcoming lease termination.
- Scotto provided tenants with market intelligence about space options in Morristown as well as in secondary/tertiary markets that tenants indicated they were interested in learning more about.
While it would be unfair to the retailers to prematurely discuss the details of leases that are not completed, we know that, fortunately, many tenants are making positive progress in their discussions and negotiations for new locations. We will continue to reach out to the tenants, and remain open to any requests for assistance.