SmallBoxRendering.jpg

A composite rendering shows what small-scale retail spaces made from recycled shipping containers might look like in downtown Cleveland's Warehouse District. A nonprofit group and a local start-up company are promoting a plan to line the edges of parking lots in the district with small, temporary stores.

(Historic Warehouse District Development Corp., Sixth City Studio)

CLEVELAND, Ohio -- Despite years of discussion about building offices, apartments and stores in the Warehouse District, parking lots still stretch north from Superior to St. Clair avenues, dampening vitality in the heart of downtown Cleveland.

What if local stores, selling clothing, bicycle parts or other goods, took over just a handful of those parking spaces facing major streets?

That's an idea a neighborhood development group and a local company want to test, by recycling shipping containers as homes for small-scale entrepreneurs who can't afford to rent larger, permanent storefronts in the city.

Inspired by headline-grabbing projects overseas, developers across the country are exploring ways to turn utilitarian boxes into unusual buildings. Built to withstand a beating while traveling by boat, truck or rail, these containers -- often made of steel -- have found new lives as pop-up malls, single-family houses, restaurants and Starbucks drive-thrus.

Even when damaged or retired from shipping, the containers are durable. They're modular, easy to stack or interlock. Depending on the nature of a project, they can provide a cheaper alternative to standard construction. And they're easy to find, through depots, builders and websites including eBay.

In Cleveland, architects and neighborhood groups have used containers to build a farm stand in Ohio City and bicycle storage in several neighborhoods. The Historic Warehouse District Development Corp. and Cleveland Container Structures, a local start-up company, believe the boxes also could serve as low-cost, flexible retail bays.

"We're having trouble starting the conversation about retail because rents are a little high, especially when you couple high rents with large spaces," said Thomas Starinsky, the Warehouse District group's associate director. "You don't have an easy time building business when you have rent looming over your head every month."

His concept, Small Box, involves starting with three to five containers on parking lots just north and south of St. Clair, west of West 3rd Street. Other potential locations could include lots along West 6th and West 9th streets.

A five-container project might require $80,000 to $100,000, Starinsky said, though he cautioned that the group doesn't have firm cost numbers.

Real estate brokers say downtown retail rates range from $12 to the high $20s per square foot, depending on the lease terms and the extent of renovations a tenant requires. Downtown is awash in empty first-floor retail spaces, but many of them are sprawling and in need of significant investments.

"Because of the size of the containers being so small and the cost of refurbishing a container being less than a traditional brick-and-mortar space, we feel confident that the rents will be below the current market rates," Starinsky said.

Small Box would offer fledgling retailers and start-up businesses a smaller option, with lower overhead and a high-profile location. And the containers could be moved to make way for development or to build buzz in another part of downtown.

"Obviously this is a temporary thing," said Richard Sheehan, who works with retail tenants and downtown property owners at the local office of the Newmark Grubb Knight Frank real estate brokerage. "It could be three years. It could be five years. It could be moved. It's really a stepping stone. I think it will have a hot feeling with it, to kind of generate some excitement for retail."

Sheehan also sits on the nonprofit Historic Warehouse District Development Corp.'s board and leads its retail committee.

Niche projects grab international attention

In London and New York City, developers and urban planners have used shipping containers as retail incubators -- low-risk homes for new concepts or online businesses testing a brick-and-mortar format. A container mall in New Zealand includes a grocer, a department store and a shoe store, among other tenants.

After Hurricane Sandy ravaged the East Coast, a cluster of container boutiques popped up at Manhattan's South Street Seaport as part of a recovery push along the East River. Another New York City container market, in Brooklyn, operated for a year before a developer took over the site for a large project.

The containers aren't a perfect solution to small-scale construction. Depending on the project, they can require extra insulation to buffer against extreme heat or cold. If they've been used to transport hazardous materials, they might need extensive cleaning. And developers can run into challenges with city building codes, since containers for human habitation are still a novelty.

In Denver, Colo., Gravitas Development Group is preparing to open an 8,200-square-foot container complex called 25th & Larimer. The project, in an artsy and industrial district, involves two layers of shipping containers, with stores and restaurants on the first floor and small offices above them.

Starbucks Corp. has used shipping containers to create a handful of modular walk-up and drive-thru stores, in cities including Tukwila, Wash.; Salt Lake City, Utah; Denver, Colo.; Portland, Oreg.; and Chicago. Though developers in other cities are using shipping containers to house restaurants and coffee shops, a team in Cleveland is focused on more traditional retail and service businesses.

Ryan Diggins, a partner with Gravitas, said he didn't necessarily save money when compared with traditional construction. The project, a permanent one, includes electricity and plumbing and was designed to meet Denver's standard building code. Each restaurant or store has a bathroom. The containers are insulated and have drywall on most walls, pine ceilings and polished wood floors.

The project is fully booked. With small spaces, the monthly rents and overhead costs are relatively cheap. But it's a good deal for Gravitas, which can charge tenants a premium per-square-foot rate without inducing sticker shock.

"We pre-leased this project faster than any of the other projects we've done," Diggins said, "and we honestly could have tripled the size of it and still pre-leased it. ... You just attract a different type of business with a project like this.

"You're going to get people who are open to new ideas and want to be part of a community," he added. "It's really all about the tenants. The containers are really just a vessel to showcase what they are doing on the inside."

Cleveland concept aims for more than profits

Dreamed up by a nonprofit group and a start-up company, the Warehouse District container project isn't designed with a pure profit motive -- but it needs to attract investors and promise a return. The concept has a civic bent, as an exercise in filling dead zones and broadening the district's appeal beyond restaurants and entertainment venues.

"If it's a successful idea that truly does catch on and become a niche business for me, then the money will come," said Michael Rastatter, who runs Cleveland Container Structures and is pitching other projects including a shipping-container house in Ohio City. "That's not the idea coming into it."

The Small Box model isn't unlike what developer Dick Pace is doing at the 5th Street Arcades, a pair of indoor shopping corridors that runs between Euclid and Prospect avenues. Since taking over the retail spaces last year, Pace has filled or leased most of the long-vacant storefronts by offering free or reduced rent and working with the city of Cleveland to find financial help for local entrepreneurs.

In Denver, Colo., Gravitas Development Group is building a two-story retail and office complex made of recycled shipping containers. Unlike movable container clusters in New York -- and the project envisioned in Cleveland's Warehouse District -- the Gravitas project is a permanent installation designed to meet Denver's building codes.

Small Box might compete with those arcades, as well as the historic Arcade between Superior and Euclid. But, Starinsky points out, there is nothing comparable in the Warehouse District and very little bite-sized space downtown. At 160 square feet, each 8-by-20 container is comparable to an eat-in kitchen or a large bathroom.

"This is the Warehouse District's contribution to the conversation about growing retail downtown," Starinsky said. "This, in our opinion, complements what the 5th Street Arcades are doing and what we hope will happen in the Arcade."

T.J. Asher, whose family owns parking lots off St. Clair, confirmed that he is discussing the container project with the Warehouse District team. But he hasn't made any commitments. There are lingering questions, including whether the Ashers will be comfortable giving up 10 or so parking spaces in busy lots and what sort of rent they would charge for the real estate.

The family still has bigger plans for the parking lots, which could accommodate a blend of offices, apartments and retailers. But there's nothing imminent. Asher, the chief executive officer of the Weston Inc. real estate company in Warrensville Heights, doesn't believe the container project will make his site more attractive for large-scale development. Still, he's intrigued.

"I like that they are promoting more retail downtown, so there are more people on the streets and there's more activity," he said. "Ultimately, it might be a breeding ground for people so that they can expand their business and get into a building."

Small Box is one of a dozen proposals seeking grants and grassroots funding through a contest orchestrated by Enterprise Community Partners, an organization focused on neighborhood development.

The contest offers the possibility of a $10,000 grant, supported by nonprofit group Cleveland Neighborhood Progress; whatever money each competitor can raise from online donors; and a $10,000 grant, sponsored by Ohio Savings, for the concept that attracts the most public buy-in.

As of late Thursday, the Small Box idea had raised just over $5,900 online, narrowly trailing a fundraising push for a nursery housing children whose parents are sick, homeless or struggling with addiction. The crowd-funding contest, at www.crowdrise.com/Nurtureanidea, started Oct. 14 and will end Nov. 8.