CLEVELAND, Ohio — Though 20 companies have expressed “strong interest” in leasing showroom space in Cleveland’s medical mart project, don’t expect any signed agreements soon.
“No one will sign contracts until we can firmly deliver a[n] [opening] date,” said Mark Falanga, senior vice president with Merchandise Mart Properties Inc. (MMPI), the Chicago-based company that is to develop and own the medical mart.
Right now, MMPI won’t provide specifics about an opening date except to say that it’ll happen sometime in 2013. Developers of a competing medical mart project in New York, which also has no official opening date, in July announced commitments from 11 tenants to lease space in a $1 billion, 60-story skyscraper that would house medical equipment showrooms.
Falanga also said that about 15 associations and trade shows have expressed “strong interest” in holding conferences at the convention portion of the proposed medical mart facility. Falanga spoke Tuesday afternoon at a special session of Cleveland’s City Council, which was convened so MMPI could inform council members of changes to the company’s plans in developing the medical mart. The city must sign off on any land-acquisition changes to MMPI’s plans.
For MMPI, signing tenants is no small matter. According to a development agreement it signed with Cuyahoga County in April, MMPI has one year after site selection occurs to convince 10 tenants to spend three years in the medical mart and has to land commitments for five trade shows and another five conferences in that same time.
Falanga called the company’s new plan, switching the showroom portion of the project to the northern edge of Mall C from its previously planned location on St. Clair Avenue near Key Tower, the “only one viable alternative” for the project’s site. The company studied 23 site alternatives, but settled on the Mall C site in part because it would provide “immediate proximity” to the project’s convention space, which is located underneath the mall.
Additionally, plans to use the nearly 90-year-old Public Auditorium for meeting space evaporated when inspections in recent months revealed that renovations to the building’s heating, cooling, mechanical and electrical systems would cost around $85 million, instead of the $32 million budgeted for the improvements. Many Council members expressed frustration at MMPI’s plans to drop Public Auditorium, but most seemed to buy the company’s reasoning, though Mike Polensek complained of being “bait-and-switched.”
Since Public Auditorium has been dropped from the medical mart plans, so too has the intention of hosting medical conferences as early as the middle of 2010. MMPI had planned to do simple renovations to get Public Auditorium’s main floor in good enough shape to host small conventions while simultaneously doing more extensive renovations on upper floors.
Earlier plans called for the showroom portion of the project to be located on St. Clair Avenue where the Sportsman Restaurant stands, but the land proved too expensive to fit into the project’s budget, Falanga said.
Falanga stressed that MMPI remains “100 percent committed” to the medical mart project and is “not deterred” by the changes to construction plans, which he said wouldn’t disrupt the project’s timeline. Despite earlier threats from Cuyahoga County Administrator Jim McCafferty to suspend $333,333 per month payments to MMPI if site negotiations continue to drag, neither McCafferty nor any council members reiterated the possibility.
Falanga reiterated the oft-repeated contention that the nation’s first medical mart to establish itself — Cleveland is battling New York and Nashville for the distinction — would enjoy the upper hand over its competitors. “It’s a critical issue to take advantage of the first-mover benefits,” he said.
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