From hospitals to device manufacturers to health IT companies to furniture makers, the list of the Cleveland medical mart’s first announced tenants is impressive in breadth.
MMPI, the Chicago-based property developer behind the $465-million Cleveland Medical Mart & Convention Center, announced a list of 57 medical mart tenants and 31 conferences, conventions and trade shows at a ceremonial groundbreaking on Friday. The mart is expected to open in fall 2013.
The announcement is a big deal for MMPI and the medical mart, a sure sign of progress and an indication that the project — whose future has sometimes been clouded by tension between MMPI and the city plus doubts from the taxpayers who are footing its bill — is making its way down the long road to becoming a reality.
But the lack of many big-name, high-profile national healthcare leaders makes the list seem, at first glance, underwhelming. (Full disclosure: MedCity Media is among the tenants, and our two-year-old company would certainly have to be considered one of the small names.)
Think again, says MMPI.
While tenants like home health products manufacturer Invacare (NYSE: IVC) and sterilization products maker Steris (NYSE: STE) are familiar names that call Northeast Ohio home, they rank at the top of their fields. And Wisconsin-based Johnson Controls (NYSE: JCI), which makes everything from building management systems to car batteries to refrigeration products, posted $34 billion in revenues last year.
“We’re just getting started,” said Greg Sanker, MMPI’s vice president of leasing. “We’ve got two-and-a-half years to add to an already impressive roster.”
Plus, bigger isn’t necessarily better, Sanker said, pointing to another tenant, Medina, Ohio-based orthopedics developer OrthoHelix Surgical Design. The company offers technology many of the big players in the market can’t match, he said.
That may be, but wouldn’t it stand to reason that the heavy hitters in the world of medical technology — like the high-profile movie stars that draw people to theaters — would stand the best chance of attracting buyers to the medical mart? So where are the Philips Medical Systems, the Siemens Medical Solutions, the GE Healthcares of the world?
Well, maybe it was to be expected that most of the tenants in the first phase are more regionally known than internationally renowned companies. It’s likely the big international firms are in the “waiting-and-watching” mode due to previous uncertainty surrounding the project, according to Baiju Shah, president of Cleveland-based economic development group BioEnterprise Corp., which is among the mart’s first tenants.
It’s possible that the momentum created by the initial announcement will compel some of the big guys to sign on the dotted line.
The overarching strategy behind the initial tenants list is not surprisingly based on the end-customers who’ll visit the mart: hospitals. “It’s driven by the hospitals and their needs,” said Sanker. “These other companies and organizations [in the medical mart] will support those needs as those needs evolve.”
Somewhat surprisingly, four hospitals have chosen to be tenants as well as (presumably) customers: Cleveland Clinic, University Hospitals Case Medical Center, MetroHealth System and Sisters of Charity Health System.
Perhaps most significant for MMPI, the 57 announced tenants have to make Cleveland the clear and overwhelming front-runner in the medical mart competition with Nashville, which has announced just three tenants so far, and only one since April. Cleveland has signed its tenants to letters of intent, which aren’t legally binding contracts. Nashville, which unlike Cleveland doesn’t have public funding for its project, is trying to scrape together private financing, and therefore is signing its tenants to leases.
The developers behind the Nashville Medical Trade Center enjoy drawing that distinction, and also boast that their plans call for 10 times the amount of Cleveland’s showroom space (1 million square feet vs. 100,000 square feet.)
“The emperor in Cleveland has no clothes,” said Cole Daugherty, a spokesman for the Nashville project. “Today our suspicions were confirmed that the announcement from Cleveland is not a list of tenants with leases but rather a list of companies from the region with non-binding letters of intent.”
“Our facility design and our business practices couldn’t be more different than the folks in Cleveland,” Daugherty continued. “We will hold no ceremonies nor release any lists without binding commitments from our partners.”
Note the use of the word “region,” as a shot at the lack of big-name companies in Cleveland’s tenant base. While it’s easy to dismiss those words as just the heated rhetoric of a competitor, even MMPI would have to admit that a few more big, global companies would make its tenant list all the more formidable.
Nonetheless, it’s still early. Nashville hasn’t landed any big fish either, and those fish are still out there, ready to be caught.
So it’s fair to say that MMPI is off to a good start — but still has plenty of work to do.
Here’s a video of the Cleveland medical mart groundbreaking, from regional marketing group Positively Cleveland.