Three med­i­cal trade cen­ter projects stuck in neu­tral

Three planned trade cen­ter projects stalled

Modern Healthcare - - Front Page - Shawn Rhea

De­lays have plagued three com­pet­ing ef­forts to open med­i­cal-prod­uct trade cen­ters that would draw buy­ers from across the coun­try, and at least one de­vel­oper has said the down­turned econ­omy has forced it to place its project on hold.

The econ­omy “made it a very chal­leng­ing time for com­pa­nies to in­vest in new construction,” said Brian Con­way, spokesman for the Greater New York Hospi­tal As­so­ci­a­tion sub­sidiary GNYHA Ven­tures, which in Septem­ber 2008 an­nounced it had part­nered with real es­tate de­vel­oper Is­rael Green to con­struct a $1 bil­lion, 1.5 mil­lion-square-foot World Prod­uct Cen­tre in mid­town Man­hat­tan by 2013 (Sept. 1, 2008, p. 24). Construction of the cen­ter was to be fi­nanced us­ing up­front rev­enue from 10-year ten­ant leases with a va­ri­ety of med­i­cal-prod­uct man­u­fac­tur­ers.

GNYHA Ven­tures, which had no eq­uity in the de­vel­op­ment, was set to re­ceive com­mis­sions for bro­ker­ing the lease agree­ments, but in De­cem­ber 2009 the group an­nounced it would likely scale back its orig­i­nal plans and in­stead lease 300,000 square feet of ex­ist­ing real es­tate to house the ven­ture. In late March, how­ever, Con­way ac­knowl­edged that GNYHA Ven­tures has yet to de­ter­mine a fi­nal plan. “The World Prod­uct Cen­tre as a con­cept is still alive, and we con­tinue to look for an ap­pro­pri­ate lo­ca­tion,” he said.

The de­vel­oper of a pro­posed Nashville­based med­i­cal-prod­uct trade cen­ter, Mar­ket Cen­ter Man­age­ment Co., also has strug­gled to bring its plan for a $300 mil­lion, 1.5 mil­lion square-foot fa­cil­ity to fruition since it was an­nounced in May 2009. Bill Win­sor, pres­i­dent and CEO of the com­pany, said that while the de­vel­op­ment is mov­ing for­ward, the fa­cil­ity will not open in July as orig­i­nally planned.

“What’s de­vel­oped since last year is we an­nounced the site, which is the ex­ist­ing con­ven­tion cen­ter” in down­town Nashville, Win­sor said.

But while the Nashville ef­fort has se­cured a site, in­vest­ment in the de­vel­op­ment’s construction has been scaled back to $200 mil­lion, and the es­ti­mated open­ing pushed back by more than 2½ years to early 2013. Win­sor also ac­knowl­edged that the project has yet to snag its first ten­ant even though the site was se­cured nearly five months ago. “We just launched our com­pleted leas­ing pro­gram, and we need 60% to 70% pre-leas­ing to start construction.” That would re­quire roughly 350 phar­ma­ceu­ti­cal, med­i­cal de­vice and other med­i­cal-prod­uct ven­dors to lease space at the site, Win­sor said.

The city of Cleve­land has been work­ing since 2007 to break ground on its ver­sion of a med­i­cal-prod­uct trade cen­ter. Three years ago, the city im­ple­mented a 0.25% sales tax that aims to raise $425 mil­lion to fi­nance the ven­ture. The 20-year tax thus far has raised $91 mil­lion, but the de­vel­oper—Chicagob­ased Mer­chan­dise Mart Prop­er­ties—has yet to com­plete con­tracts to pur­chase sev­eral parcels of city-owned and pri­vately owned land in down­town Cleve­land where the med­i­cal mart would be lo­cated.

The de­vel­oper also has yet to an­nounce any com­mit­ments by med­i­cal-prod­uct com­pa­nies to set up shop in the mar­ket­place. But Mark Falanga, Mer­chan­dise Mart Prop­er­ties’ se­nior vice pres­i­dent, said those com­mit­ments are forth­com­ing. “We have about 35 to 40 let­ters of in­tent from man­u­fac­tur­ers that want space in the mart or have said they will par­tic­i­pate in the trade shows that take place,” said Falanga, who de­clined to pro­vide any names.

Falanga said the de­vel­oper is tar­get­ing the last quar­ter of this year to break ground on the med­i­cal mart, which should be com­pleted in 2013.

Mar­ket Cen­ter Man­age­ment Co. has strug­gled to bring this Nashville trade cen­ter to its fruition.

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