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Shipping Containers Offer a Creative New Venue for Retailers and Restaurants

Waffle Love is located at SteelCraft Long Beach, a center that opened in February 2017 and features a number of shipping container-based food purveyors in California.

What’s that thing everyone always says about millennials? That they crave new experiences, novel environments and locally produced items that have a story — or at least a little substance — behind them? Yes, that’s it. Ask and ye shall receive. They’ll even ship this request to you. Well, maybe not right to your door, but straight off a boat and into your nearest underused plot of viable land.

We’re talking shipping containers, which have become the new avant-garde approach to traditional retail experiences.

“I think any time you can find a new creative use for an item or a space it is going to capture interest,” says Hartley Rodie, who is developing the Churchill, a 16-container shopping and dining project on North 1st Street in Phoenix that is scheduled to open in fall 2018.

Being a millennial himself, Rodie and his partner, Kell Duncan, both 29, were inspired to undertake this new project after examining what was missing — both within their own lives and within their community.

“Neither of us felt fulfilled by our areas of focus, so the question became ‘what’s next?’” he says. “I knew whatever it was going to be, for me, it was important to provide positive value to the surrounding community. The inner entrepreneur in me thought — for better or worse — my greatest impact could be in a profit-with-purpose endeavor. I remember being really inspired when I heard about Tom’s Shoes.”

LOCALLY BASED, LOCALLY SERVED 

Rodie believes his project’s profit-paired-with-philanthropy approach will appeal to area residents who are looking for something different from the standard big box store found in power centers or flailing national apparel chain dotting malls.

“The Churchill is founded on a simple idea: to bridge the gap between Phoenix residents and local businesses while doing something positive for the surrounding community,” he continues. “All of the businesses in the Churchill are local and hand-selected. We have a mix of established operators and start-up businesses.”

The Churchill will add “purpose” to the area not only through its unique mix of local restaurants, bars and retail shops, but through these tenants’ commitments to each other and to the local community.

“Each business, as written in the lease, is required to fulfill ‘marketing rent,’ as well as ‘social rent,’ in addition to their monthly rent,” Rodie explains. “To complete marketing rent, each tenant must use their social media pages to cross promote with another business within the Churchill. We do this to encourage collaboration over competition. Social rent requires each of our tenants to complete four hours of community service each month. In addition to social rent, tenants and customers have the option to partake in weekly service outings or monthly fundraisers organized by the Churchill management.”

Rodie’s philanthropic spirit was inspired by Tom’s, while the idea for social rent was suggested by the owner of Pop Brixton, a shipping container park in London. This entrepreneurial drive paired with a give-back approach is reminiscent of another famous face on the shipping container shopping center scene.

Tony Hsieh, founder of online shoe store Zappos, which heads up the Soles4Souls shoe donation program, among other philanthropic efforts, was the driving force behind one of the first shipping container parks in America to garner attention. Downtown Container Park, which features 39 repurposed shipping containers and locally manufactured Xtreme Cubes, opened in 2013, rejuvenating half a city block on 7th Street between Carson Avenue and Fremont Street in Downtown Las Vegas. The park, constructed by Breslin Builders, doesn’t have many familiar names on the tenant roster, which includes local entities like San Miguel Trading Company cigar shop, Trikke Las Vegas bike rental, Vegas Flip Flop footwear, Winky Designs custom watches, and accessories and Art Box, which the park’s website describes as “Las Vegas artisans showcasing their handcrafted jewelry, home decor and more.”

The park has also allowed some local businesses to expand, while it’s launched the success of others. Vintage NV, an owner-operated women’s boutique that specializes in mid-century modern furniture and home accessories, first opened in the city’s Arts District in August 2014 before opting for a space in the park in 2016. Big Ern’s BBQ’s debuted at Downtown Container Park before attracting the attention of diners and casino owner-operators alike. The second shop is now open at the Fiesta Rancho Hotel & Casino food court in North Las Vegas.

FOOD FOR THOUGHT 

Big Ern isn’t the only eatery embracing container life.

“Chick-fil-A is using containers as a drive-thru at restaurants that need to be closed for renovation, such as its Rome, Georgia, location,” says Elaine Petitogut, a marketing strategist at Charlotte, North Carolina-based Boxman Studios, which creates customized shipping containers for brand immersion experiences, hospitality, retail shops, pop-up restaurants and mobile bank branches.

While many container-based projects have at least some food component, Kim Gros, founder of the SteelCraft project, has taken this concept to a whole new level. Gros has created entire food-themed container parks in the Southern California areas of Los Angeles and Orange County.

“The SteelCraft project came out of a desire to provide the neighborhood with a compelling, modern space that values restoration; the craft experience that comes with high-quality food and drink; and community,” she says. “We went with creating an all-food destination as the community was ‘hungry for’ high-quality restaurants and food options.”

The first 15,000-square-foot SteelCraft opened in Long Beach in February 2017. The outdoor urban eatery includes Desano Pizza, Lovesome Chocolates, Pig Pen Delicacy, Smog City Brewing, Steelhead Coffee, Tajima Ramen, the Fresh Shave and Waffle Love, which all operate in 20- to 40-foot shipping containers that are capped off by a communal dining area. The project has been such a hit that two new locations are now in the works.

“We were flooded with inquiries from all over the country almost immediately [after opening],” Gros says. “That’s when our team began to dream bigger. In my heart, yes, I thought SteelCraft would grow to something bigger, but in my head I didn’t think it would grow so quickly.”

The second deal, for a 1.8-acre lot in Garden Grove that was formerly occupied by a Black Angus restaurant until 2005, was finalized in just 60 days. The lot was acquired by the Garden Grove Agency for Community Development in July 2009. SteelCraft was granted unanimous approval to utilize the location during a Garden Grove City Council meeting on June 13, 2017.

Martin Howard, president and CEO of Howard CDM, SteelCraft’s construction and development partner, believes the container concept — which celebrates everything craft and community — was a natural fit for the city. That’s because Garden Grove is in the midst of its Re:Imagine initiative that is transforming the downtown and civic center areas through the use of public spaces.

“Garden Grove is the perfect second location,” Howard says. “It’s right in the city’s center in an already densely populated area of Orange County. We can bring connectivity to the downtown civic area. Part of SteelCraft’s success is that it has become a destination for residents and travelers alike. People travel from all over to participate in what SteelCraft has to offer.”

The third project, SteelCraft Bellflower, will occupy a 15,000-square-foot, city-owned lot on Bellflower Boulevard and Oak Street. The project will include two additional food tenants, a second story and covered barn seating.

Bellflower isn’t necessarily undergoing a specific re-imagination, though the city is optimistic that novel projects like SteelCraft can usher in an era of reinvention as it continues to compete for jobs, residents and retail attractions.

“We are excited to welcome SteelCraft and its rapidly growing reputation as a unique dining and social experience into Downtown Bellflower,” says City Council Member Juan Garza. “It will complement our niche retail stores and delicious home-grown restaurants perfectly, and continues Downtown Bellflower’s growing renaissance and reputation as a desired destination in our region.”

The development is estimated to generate $50,000 in annual sales tax and an additional $22,000 in annual lease revenue for the City of Bellflower.

The Garden Grove outpost is scheduled to open in mid-2018 with Bellflower following suit later that year.

Many may wonder why cities and developers would opt for shipping container eateries when food trucks provide much of the same experience. To Petitogut, however, this is a no-brainer.

“Food trucks and container restaurants are two totally different beasts, with different opportunities and challenges,” she explains. “Food trucks are under some scrutiny with municipalities because they currently operate under the Department of Transportation [DOT], so the codes and inspection processes are very different. As the DOT becomes stricter with the health and safety codes, operating a food truck will become more difficult.”

Boxman delivers its restaurant containers up to code. They also include climate control, ADA (Americans with Disabilities Act) accessibility and the resources necessary to be turnkey operational, minus the food ingredients. These can be crucial differences between the two vessels when lunchtime rolls around.

“For example, a food truck has a maximum water supply capacity of 30 gallons,” Petitogut continues. “Once the truck runs out of water, it is required to shut down. Our container restaurants can tie into the existing water supply, so businesses aren’t limited by water capacity.”

She also notes that the cost of a turnkey restaurant container varies, but that the turn-around time can easily affect an eatery’s bottom line in a positive way.

“Speed to market is very important, particularly in food service,” she notes. “Every week a restaurant isn’t operating, it’s losing 2 percent gross profit. So, opening sooner is important for restaurants. We can shorten the timeframe for opening day by 30 percent to 50 percent compared to a brick-and-mortar restaurant opening.”

This was the case at Zatar, a Mediterranean container restaurant at Missouri University of Science and Technology (MOS&T) in Rolla, Missouri, that Boxman developed in partnership with the Compass Group. The campus needed to supply new dining options for its student body, which would soon be returning to school for the spring semester, making it impossible to get a new brick-and-mortar dining option open by the first day of class.

“Zatar restaurant at MOS&T was fully operational less than a week after set-up,” Petitogut says. “There are tons of very practical reasons why shipping container architecture is becoming so popular: sustainability, affordability and mobility are all big differentiators for our industry. Those extra months of operation had a huge impact on Zatar’s revenue last year.“

PRACTICALLY PROFITABLE 

The added perks that can be contained within the steel walls of those repurposed shipping shops are many, according to Casey Stowe, a principal at Tulsa, Oklahoma-based Nelson+Stowe Development, which opened the Boxyard, a 39-container shopping destination in Tulsa, in late 2016. Like Zatar’s owner, one of the perks he noticed was increased profits across his tenant roster, which includes Beau & Arrow women’s apparel company, East + West men’s fashion shop, Nova Comics and WirWar bar and restaurant, among others.

“My tenants at the Boxyard have recorded sales two, three and four times what they projected to sell,” he notes. “One of their biggest problems has been keeping enough inventory. A good problem to have, to be sure.”

The lack of inventory touches on one critical aspect of container stores: the lack of space. While there can certainly be a downside to such small spaces, especially where inventory is concerned, it also means lower rents, more flexibility and more opportunity for creativity. These perks are particularly attractive in dense, urban cores with only small plots of available land, as Stowe is aware. The idea for the Boxyard initially came about after he visited Boxpark Mall in London during the 2012 summer Olympics and fell in love with it. The opportunity came about when Nelson+Stowe responded to a request for proposals (RFP) on a very small piece of land at the corner of 3rd Street and South Frankfort Avenue.

“I think the scale is appropriate and attractive,” Stowe says. “Of course, the novelty of a shipping container mall is what brings folks down to the Boxyard initially, but they seem to really connect with it once they experience it. Almost everyone walks away with a very different opinion of the space versus what they thought it was going to be like going in. It is certainly something you need to experience to truly appreciate.”

Then there’s the “story,” which hits at the heart of many Millennial shoppers.

“I think there’s a little element of magic that shipping containers bring to a space,” Petitogut believes. “Each container has a story. It’s been on a journey — maybe somewhere you’ve never been — and now, you get to be part of that story by shopping or dining there. I think people fall in love with the fantasy and the endless possibilities that shipping containers represent. They are a blank canvass that allows us to paint whatever we like.”

Gros, for one, has capitalized on this history, particularly in unique locations like Long Beach where the multi-faceted life of a shipping container can really come full circle.

“Using shipping containers to build SteelCraft seemed only natural as the Port of Long Beach is the second largest port in the world,” she says. “It has been exciting to build using materials that resonate so well with what the city is about. As we value restoration and sustainability, utilizing containers allowed us the ability to restore and give life to used containers. It also allowed us to create a space that was unique and original.”

Stowe may be happy with the containers’ tales and tenant sales, but he knows complacency is a killer in this retail environment — especially if you rely solely on the merchandise. For him, as for many owners, the experience is key.

“We have a unique venue for sure, so that helps from the experiential shopping perspective, but we also had event programming in mind from the beginning,” he says of the Boxyard, which will have 20 shops at build-out. “We designed several public spaces for interaction and specific events. We stand out by not just staging our own events but by working with other organizations in the community.”

These events include the “Boo”yard, a daytime trick-or-treating event for kids, a cornhole tournament and Third Thursday Astronomy Night, held on the project’s second floor in conjunction with tenant STEMcell Science Shop.

Stowe believes this mix of tenants, activities and themed events has created a well-rounded project that results in not just more visits, but longer stays.

“I think bringing the critical mass with you really helps,” he says. “Someone can come and shop at more than one place, listen to some music, have a glass of wine, spend an afternoon. That is hard to do at a ‘one shop at a time’ place, so having 20 shops at once helps.”

Nellie Day

This article originally ran in the December 2017 issue of Shopping Center Business.

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