A Way Forward Based On Compromise

While a number of arguments can be made for or against the project, this development as it stands is another example of what comes from an out-of-date zoning code that does not reflect or fit into the individual character of many neighborhoods throughout the city. It is Jacksonville’s heavily suburban-based code that allows for storage facilities that create dead spaces on the streetfront or otherwise don’t mesh with urban neighborhoods. There is certainly a need for storage facilities in urban neighborhoods - as people have flocked back into downtowns and established neighborhoods with smaller residences, the $38 billion self storage industry has filled a need for those with excess personal inventory. It is estimated that roughly 10% of U.S. households rent a self-storage unit.

The city of Charlotte has found a compromise between the demand for storage units and the need to avoid creating dead space on the street front. In 2015, the city changed its zoning code to include self storage as a part of mixed-use development. The new law requires the bottom floor of a mixed-use building to include at least 50% retail, office, or restaurant space, while the rest can be used for self storage. Seeking to become a better neighbor, the self-storage business has evolved to better fit into urban areas where sense of place and pedestrian centric design are of more importance.

1. Ground Floor Is Key

In that vein, can an economic argument be made to bring elements of a mixed-use building into the proposed Murray Hill storage facility? Can the building serve a dual role as both a storage unit while also including elements that allow for the generation of commerce and community engagement?

Bow Market in Somerville, Massachusetts offers a unique inspiration for the proposed storage unit facility in Murray Hill. Bow Market was a 25,000 square foot storage facility converted into an urban open-air market. By converting storage units on the first and second floors, most being only 10 foot wide, the building has now been adapted in such a way that provides affordable storefront opportunities for aspiring retail vendors.

These images, courtesy of Bow Market, show how orienting storage units on the ground floor of a storage facility could be used as cost effective storefronts that spill out into an outdoor courtyard and seating area.

While Bow Market is a complete facility conversion, a less intense inspiration also comes from the Clinton Row Project in Hunstville, Alabama. Located on a high-profile street corner in Downtown Huntsville, municipal officials worked with the owner of the Downtown Storage building to lease out nearly a dozen storage units on the ground floor to artists and artisan makers as affordable retail spaces. By reimagining existing space, a portion of the first floor of the building now serves as a retail startup incubator.

This image, courtesy of Christina Wegman, show how a 10x20 storage unit along Clinton Row has been transformed into her artist studio and retail store.

While the Murray Hill facility would bring retail to Edgewood Avenue, it would create dead space along Plymouth Avenue. This underutilized stretch of commercial property provides high visibility to the approximately 55,000 motorists passing by daily on the adjacent Roosevelt Blvd/US-17. That visibility and high vehicular traffic count, combined with close proximity to the fairly dense residential neighborhoods of Murray Hill, Riverside and Avondale, makes Plymouth a hidden gem for retail opportunities.

What if, this proposed non-occupied structure includes habitable space that activates a forgotten thoroughfare that connects Murray Hill with Riverside? Simply flipping the entrance to one row of storage units running along the Southeastern wall of the facility, from those having an interior access to instead have exterior access which opens up to the sidewalk, would create an opportunity to activate the street with perhaps a dozen micro-storefronts.

Over 55,000 vehicles pass by this site daily. Shown here are traffic counts as provided by the Florida Department of Transportation.

Using Bow Market or Clinton Row as inspiration, accommodations could be made to the proposed building’s desgin shown here that would activate the underutilized Plymouth Street with micro-retailers, artisans and artist studios.

Typically, the interior of a storage building is configured by a 10x10 foot grid with bearing walls spaced 100 feet apart. By taking this existing skeletal structure, but simply allowing for one row of storage units to open to the exterior of the building, would allow the structural system of the building to remain intact. Depending on whether the developer chooses to simply include roll up doors facing the sidewalk, or chooses to incur slightly higher costs by going with a more articulated façade treatment with windowed storefronts… the overall effect to construction costs would be minimal.

This would solve the issue of dead space - but would these small storefronts be able to be leased up? The short answer is, yes. The rental fee for a 10x10 foot storage unit rents for about $100 monthly, while a 10x20 foot unit rents for about $140 a month. This works out to be about $1/square foot. If the developer chooses to maximize the revenue opportunity, the rental fees could easily be doubled to account for any slight variations in construction costs. This would keep rents at $2 square foot, or less. For comparison, a 10x10 rental space at the Riverside Arts Market costs $25 (or more). At 4.2 weekends a month, that equates to an average rental rate of $1.05/square foot. Renting a small retail space at a comparable cost gives an entrepreneur the advantage of having built in storage for their products/supplies, the opportunity to sell to the public for more than 4.2 days a month and would no longer have to spend hours loading/unloading products.

In this scenario, the construction costs and the projected revenue per square foot would remain essentially the same. This means the developer’s proforma (which determines how much free cash flow the project will generate) is not effected, nor would the project’s projected debt service coverage ratio (which effects the availability of construction financing) be compromised. While the pen and paper remain solid, the community also benefits from transitioning the building from a gated fortress, to one that serves a dual role and contributes to the walkable fabric of Murray Hill’s commercial district. Put simply, this cost-neutral design accommodation would create high-demand, affordable storefronts for aspiring small business owners in an area where commercial activity is experiencing rapid year-over-year growth.

2. Build Retail Now, Not Later

The developer proposes to demolish the former Edgewood Theater at the intersection of Edgewood Avenue and Plymouth Street. A portion of that footprint would be replaced with a 4,845-square-foot retail building. There is a catch: no tenant has been identified, and without a future user the developer has indicated that they are unwilling to build the retail portion at this time. This creates an enormous hole in the walkable form along the popular “First Block” of Edgewood Avenue.

Looking at the project holistically, 97,200 square feet of the 97,545 square feet of the project’s revenue-producing footprint would be occupied by a user who should generate sufficient free cash flow to become revenue positive within 36 months. That means 99% of the leasable space has a user that generates enough income to cover construction financing obligations, ongoing maintenance and operational expenses and still return enough capital (referred to as the capitilization rate) to make the project viable from both a lender’s and investor’s perspective.

You can convince the right bank that a 99% occupancy rate is sufficient to lend enough money to construct both the storage unit facility and at least the shell of a retail space concurrently. When a user is identified, fit out costs could then be covered either through the re-financing of the existing debt structure, drawn against a future line of credit or be further negotiated by the investment group through a buildout loan to be paid back by the tenant via the monthly rents.

If and when the Planning Commission approves the developer’s request, they should do so on the stipulation that the issuance of building permits are contingent upon the concurrent construction of both the 3-story self-storage building and at least the shell space of the one-story retail building - if not the Plymouth Street retail as well. In today’s booming economy and low interest rate environment, developers and lenders are more willing to build and finance spec shell spaces - particularly in areas where commercial retail activity is in high demand. Potential tenants are more likely to be interested in a space where a structure already exists, either through a finished space or via ready-to-market shell space. Several examples of this abound throughout Jacksonville.

Hakimian Holdings purchased the 118,374 square foot Liberty Center office building at the intersection of Butler Boulevard and I-95 in 2016. As part of the financing of that purchase, the lender and owner agreed upon a package that would also include money to construct two spec retail structures (pictured above) on outparcels along the eastern and western corners of the property.

Mark Rubin’s AccuBuild Development owns two buildings (pictured above) at the corner of Oak and Stockton Streets in the Riverside neighborhood. In 2018, Rubin began to redevelop the dated buildings by re-skinning the facade with a more modern look and gutting the interior to bring both structures into a shell condition. The work was done on a spec basis, after hearing from many potential tenants that they were less likely to lease the space when the buildings were still in the dated and worn condition prior to the renovations shown here.

This building (above) at 1050 Edgewood Avenue was constructed as a 3,150 shell space in 2017. Originally intended to house a coin laundry business, a new tenant was identified and fit out began in 2018 to accomodate a co-branded Larry’s Giant Subs and Fired Up Pizza. The new restaurant (below) opened its doors in 2019. This success story is located just three blocks from the proposed storage unit facility.

A Final Word

The world is not always black and white. This is particularly true in the application of land use policies, which exist in a perpetual gray area. The relationship between neighborhood residences, businesses and the development community works best when reasonable accommodations can be made. When all sides refuse to budge, issues tend to become ugly and come down to legal interpretations of the fact. In those instances, there are winners and losers. When compromise is at the heart of the discussion, all parties have the opportunity to come out ahead.

The first public hearing for the proposed storage unit development will be heard Friday July 19th at 10 a.m. inside City Hall First Floor Room B at 117 West Duval Street.

Editorial by Mike Field. Contact Mike at mfield@moderncities.com.