Inside Self-Storage Magazine 07/2004: The Big Box Project

The Big Box Project
U.S. Storage Depot conceives industry-first shopping/storage center

By Kimberly Hundley

Storage Depot CEO Ronald Hagen may have accomplished a worldwide first in the self-storage industry. The designer/builder has blended national retail with climate-controlled self-storage and mini-offices in a mammoth shopping complex. Created through a joint venture with Schonsheck Inc., Willow Creek Center spans 22 acres in Canton Township, Mich. The complex contains two out parcels and 10,000 square feet for national restaurants, 200,000 square feet of commercial retail space, and 70,000 square feet of business self-storage. It already boasts such big-name retailers as Pier 1 Imports, Michaels and PETsMART.

In its previous life, Willow Creek was a real estate albatrossa vacant big box off the interstate. Though highly visible, the gargantuan building had zero appeal in todays penny-pinching business climate. U.S. Storage Depots conversion thoroughly revitalized the property, attracting shops, small businesses, and commercial and residential storage.

The mixed-use concept for self-storage construction is Hagens brainchild, and he believes it holds the power to salvage abandoned real estate across the country. Many communities, especially in the Midwest, are struggling to find viable uses for their empty big boxes, he says. This strategy could be the solution for those buildings currently standing vacant in many desirable high-visibility areas.

Although Saline, Mich.-based U.S. Storage Depot played the white knight to Canton Townships property in distress, the community was not initially receptive. Getting the enterprise off the ground was a tremendous challenge, says Hagen, whose team spent more than two years convincing city officials to approve the unique project. The area wasnt even zoned for self-storage.

We first had to educate and gain the understanding of the community, tenants and builders on how we would blend everyones requirements into a unified, coordinated design, Hagen says. Combining business self-storage with retail is a mutually beneficial relationship. The retail enjoys maximum use of the frontage, while the storage utilizes what, in most situations, is a disadvantage: the rear of the complex. In our case, weve been so successful, our retail tenants are starting to wrap around us. They took the sides and the front of the building.

Parking is another happy trade off. Willow Creeks design requires self-storage tenants to drive inside the complex, leaving coveted parking spaces for retailers. The internal loading and unloading set-up also enhances security, convenience and privacy for storage tenants. Plus, storage activity occurs behind the scenes, away from retail clientele.

One-Stop Shop for Businesses

Willow Creeks self-storage portion, located in the core of the building, is designed primarily for business rather than residential users. Tenants have the option of small offices with a bathroom, phone and fax. Interior storage walls are adjustable so customers can rent only the space they need in 200-square-foot increments; if a tenants storage needs grow, the space is easily expanded. A business center in the lobby, which operates much like a Kinkos, provides support services such as private mailboxes, copy machines, UPS drop stations and Internet access. Other amenities include racks, shelving and palate jacks, provided free for tenants use.

Were set up to be a one-stop shop for business people, Hagen says. However, we dont discriminate against residential usewe encourage it. And tenants still get all the perks, like loading inside. They never have to worry about rain, snow, wind and dust.

U.S. Storage Depot has begun incorporating small-business incubator units into all its newer facilities. Hagen calls the approach the next generation of self-storage, fulfilling a growing need in the modern business environment. More and more people are starting small businesses at home, he explains. If they want to move out of the home, we are the next step. Current tenants include manufacturing reps, a silk-flower producer and a mail-order catalog business. Office rental fees are a little below market, Hagen reports, but higher than income off self-storage.

Big-Box conversions renderings of Willow Creek Center, due to open in August.

Crucial Advantages

U.S. Storage Depots focus on the business customer could be an important new direction for self-storage, according to Hagen. Today, everyone in this industry is designing their facilities, advertising and marketing programs for the residential user, he says. Were doing a lot of unique things to adapt to the changing needs of businesses and our society. We want to be innovative and service those people. Thats what our mission is, and what makes us a little different.

Diversification allows U.S. Storage Depot to combat a persistent self-storage handicap as well: the winter seasonal slump. Offices are let under annual or bi-yearly leases, leveling off the occupancy rate. But the real advantages, according to Hager, are security and financing.

A combined-use project gives you different sources of income, helps increase profits, and makes earnings more secure because you dont put all your eggs in one basket, Hagen says. Banks love us now. It gives them greater security in their investment.

Some predict the nations self-storage market is reaching saturation. To remain viable, Hager advises developers to look for new ways to draw customers and secure financing. The beauty of the U.S. Storage Depot concept is its adaptable and can efficiently use big boxes, regardless of the size or configuration of the building and land.

The model also follows a national trend in city planning in which retail and residential developments are integrated for safer, more efficient land use. Big-box conversion allows developers to penetrate prime retail locations for self-storage. Willow Creeks storage business, for example, has no competition in the area, because zoning simply doesnt allow for a single-use storage facility.

U.S. Storage Depot has several other projects on the go, including an innovative selfstorage facility under construction near Ann Arbor, Mich. Blueprints include a climate-controlled, three-story building; an outdoor single-story structure; and a building designed especially for contractors, with 14- foot ceilings and 10-by-10 doors. When completed, the facility will be 160,000 square feet, making it the largest self-storage shop in the state.

The Future

Hagen is proud of his teams accomplishments and eager to share the big-box concept. Ive known a lot of people in the industry for many years, and a lot of developers out there are hurting. Id like to give them some insight. We all learn from new ideas someone pioneers an area and other people will modify it and possibly improve upon it. U.S. Storage Depot is in negotiations to develop a similar big-box conversion in the Chicago area, while seeking other ideal sites across the country. Hagen says every community is different and needs to be dealt with on a case-by-case basis. But experience should make the process easier next time.

We have assembled a team that is expert in working with cities and contractors, he says. It takes a lot of negotiations when youre introducing something unfamiliar and untried. People are a little reluctant and nervous. I started on the Willow Creek Center three and a half years ago, and its just now being completed. Even with the builders and engineers, the first thing you hear is, Well, we havent done this before. Climate-controlled self-storage takes a certain kind of engineering that is different than a shopping center, so you have to blend the two together.

Hagen says big-box conversion with multiple uses is an idea whose time has come. Developers of the future will have a whopping head start, too. When selling retailers and zoning boards on the concept, they can point to Willow Creek Center as a living example of property once thought dead.

U.S. Storage Depot has more than 22 years experience in the self-storage industry, designing and building award-winning facilities. For information, call 734.944.1803.

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