Monday, January 17, 2011
Med Mart lands less than 5% of top tenant prospects, 1% of medical event prospects so far
Cleveland’s Medical Mart is having trouble attracting big national names so far. Its first list of tenants and events, released Friday, showed that developer MMPI has signed a small fraction of the top prospects it identified in 2009.
Ohio companies and organizations make up most of the initial tenant list. Health events make up only about a third of the convention-hall bookings. It’s early – the project won’t open until fall 2013 – but the Medical Mart clearly has a long way to go.
So far, MMPI has landed only five of the 100 national medical manufacturers it named as showroom prospects in a list it shared with Inside Business in 2009. The hunt for national medical trade shows and conferences has been even tougher: MMPI has landed only one of the 264 medical events it listed as prospects two years ago.
InvaCare and Steris, two local medical manufacturers with national profiles, lead the list of 58 probable tenants who’ve already signed nonbinding letters of intent to lease showroom space. They were among the 100 medical furnishings and medical technology companies on MMPI’s 2009 tenant prospect list. The other three it’s landed are medical furniture makers Midmark, Cabot Wrenn Care and Intensa.
Missing so far are leading medical device companies such as Medtronic, Stryker, Philips Medical Systems and Siemens Medical Solutions — all companies MMPI named on its 2009 prospect list, all cited by MedCity News last week as desirable anchors for the Med Mart. The scarcity of big names is a reminder that the merchandise-mart concept is unproven in the medical industry. It echoes the careful, neutral responses I heard about the Med Mart from manufacturers when I was reporting on my 2009 Inside Business story, “Affairs of the Mart.”
Of course, MMPI has moved far beyond its two-year-old prospects list to sign other companies who fit the Medical Mart concept, from Michigan-based distributor Innovative Medical Systems to Johnson Controls, a large Wisconsin-based manufacturer whose building-efficiency products could benefit hospitals constructing new offices. MMPI President Chris Kennedy told Crain's it has letters of intent for all the space in the four-story Med Mart and may have to expand north -- where the county administration building is now -- to meet demand.
Kennedy described the tenant list as “broad and deep” when I talked with him at the groundbreaking ceremony on Friday. “[It’s got] everything from associations, educational institutions, design products and interior finishing products to hard-core medical technology and patient care devices,” Kennedy said. “Within each category, there’s a lot of depth. The team put that together strategically to create a mini-critical mass in each component that would be attractive to certain trade shows. And the trade shows are now coming because they have groups that are totally relevant to their area.”
The Med Mart needs tenants before the convention center can attract medical events. That may be why the 24 event bookings released Friday included only nine medical-related shows. In 2009, MMPI showed me a prospect list of 264 small and medium-sized medical conventions and trade shows. So far, only one event on that list has signed on: the Ohio Optometric Association’s EastWest Eye Conference.
Deal-making should pick up now that MMPI has broken ground, Kennedy says.
“The velocity of deals has increased dramatically over the last 60 days,” he told me Friday. “The reality is, people don’t want to commit to a building that they don’t know is going to be built. Convention managers don’t want to make a commitment four years from now to a trade show hall that might not be there for them. Those are enormous long-term decisions.
“Once they see construction, once they see those signed documents and a timeline that is reasonable, then they commit. And that’s what’s going on now.” MMPI is now signing about one new tenant and one new event per week, he says.