CLEVELAND, Ohio — Backing off a bit from previous statements about the significance of being first, the chief of the company that’s developing Nashville’s medical mart said attracting a “critical mass” of health-industry tenants would be the decisive factor in securing victory in the three-city medical mart competition.
“Without critical mass and an array of industry representation that’s worthy of someone buying an airline ticket,” simply achieving first-mover status won’t help much, said Bill Winsor, chief executive of Dallas-based Market Center Management Co.
Winsor said his company has started working to secure financing for the $250 million Nashville Medical Trade Center, but didn’t want to begin the fundraising process in earnest until Nashville’s City Council approved plans for a new convention center, which it did Monday night. Unlike Cleveland, Nashville’s medical mart developers aren’t looking for any substantial public funding. Rather, the plan is to fund the 2 million-square-foot Nashville Medical Trade Center via an upfront equity payment and borrow the rest.
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Such projects typically require about 20 percent in equity, putting the figure at $50 million, Winsor said. The project is appealing to lenders since it doesn’t consist entirely of new construction, according to Winsor. Market Center Management plans to build a 12-story tower that would house the medical-products showcase atop Nashville’s existing underground convention center.
“This project has an allure to it because it’s an expansion of an existing infrastructure instead of a new construction project,” Winsor said.
Before starting construction, Market Center will look to begin signing tenants. Standard industry practice calls for having 65 percent to 70 percent of permanent showroom space leased in the center before construction commences, Winsor said.
Winsor said he wasn’t phased by plans announced by the competing World Product Centre in New York, which earlier this month predicted it will open by the middle of next year. The New York developers scrapped plans to build a 60-story skyscraper in Manhattan and now say they’ll lease existing space. The developers have already announced commitments from 11 tenants.
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“I don’t think they have a building yet,” he said. “It’s hard for them to project an opening when they don’t have a building.”
In recent months, Cleveland officials have delighted in lobbing verbal grenades at the other projects because, unlike Cleveland, New York and Nashville don’t have a committed source of funding. (Cuyahoga County commissioners in 2007 pushed through a 20-year quarter-cent hike in the county sales tax, which has thus far netted about $75 million, to fund the $425 million medical mart project.)
But what was once Cleveland’s biggest strength in the medical mart race could soon turn into a weakness if New York or Nashville can quickly line up financing. That public funding has come at a heavy cost to Chicago-based developer Merchandise Mart Properties Inc. (MMPI) in the form of intense public scrutiny and lots of back-and-forth with local elected officials. While Cleveland officials have spent the last few months arguing over location and ripping MMPI for publicly exposing the physical flaws of a Great Depression-era building, its competitors look to have been closing the gap — if there was much of a gap in the first place.
