Monday, November 30, 2009

Medical Mart Game On: Nashville vs. Cleveland vs. NYC

Posted By on Mon, Nov 30, 2009 at 6:38 PM

click to enlarge Rendering of the proposed Nashville Medical Trade Center (source: Market Center Management Company, Ltd.)
  • Rendering of the proposed Nashville Medical Trade Center (source: Market Center Management Company, Ltd.)
Today's splashy announcement of plans to convert Nashville's existing convention center into a 12-story medical trade mart injects new life into a race among three cities to be first to build such a facility. Both Cleveland and New York have been pursuing similar projects with different corporate partners for quite some time.

The Nashville Medical Trade Center, as it is being called, would be jointly owned by Dallas-based Market Center Management Company, which operates trade marts in Dallas, Brussels and Shanghai, and a real estate investment trust called CNL Lifestyle Properties. The developers plan to seek private financing for the estimated $250 million it will cost to renovate our existing convention enter and build a 12-story addition that adds 1.5 million square feet of space.

Cleveland's proposed medical mart, in contrast, will rely significantly on public money--specifically, a quarter-cent county sales-tax hike that has already pulled in about $75 million toward the estimated $425-million project. But the Cleveland mart hit some serious snags recently when its developer, Chicago-based Merchandise Mart Properties, revealed it wants to switch sites for the project, and Cleveland's mayor is royally pissed.

Developers in New York, meanwhile, have taken a different approach to the proposed World Product Centre, slated to open with 1.5 million square feet of space in late 2013. Their strategy entails locking in tenants up front as a way to secure construction loans to build a $1 billion, 60-story tower on Manhattan's west side across from the Javits Convention Center. The New York project announced its first set of signed partners last summer, including supplier giant Cardinal Health, and hopes to break ground early next year.

Does Nashville's announcement put pressure on these other cities? How many medical trade marts can America's health care economy support, anyway? Bill Winsor, the CEO of the firm behind the Nashville mart, asserts (self-servingly) that the nation has room for only one mart, but really it's uncharted territory. As the Wall Street Journal recently observed, the merchandise mart model concept "is rare and hasn't been applied to the medical industry in such a large way."

Be that as it may, some in Cleveland see Nashville's announcement as an urgent signal that it's time to get their project back on track. "The message is, we can't dawdle," Cuyahoga County Administrator Jim McCafferty said Monday. "We need to make a decision in the near future whether we can go ahead or not." By quarreling over the location issue, added Cuyohoga County Commissioner Peter Lawson Jones, "We are losing our competitive advantage."

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