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 Nashville-based 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—Chicago-based 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.
