The Chicago-based property developer behind Cleveland’s medical mart still hasn’t signed any of its 63 prospective tenants to binding leases.
However, it’s a common practice to sign prospective tenants to nonbinding letters of intent (LOIs) in the early stages of projects, various industry experts told The Plain Dealer.
“I think everybody is aware that we are just getting started,” MMPI sales chief Greg Sanker told the PD. “We have two-and-a-half more years to fill the center.”
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At the January groundbreaking for the medical mart, property developer MMPI announced 58 tenants that intend to take space in the four-story building, which is to be a collection of medical products showrooms. MMPI has since signed another five prospective tenants to LOIs, but wouldn’t reveal their identities to The Plain Dealer.
At least two of the 58 announced tenants told the newspaper that they were wavering on their LOI commitments and two others said they had a long way to go before singing contracts. Companies that back out of their LOIs face few, if any, negative or financial consequences.
The LOIs-instead-of-leases debate has been one that Cleveland’s top competitor to open the world’s first medical mart, Nashville, has thoroughly enjoyed highlighting. Nashville is eschewing the LOI route and signing tenants to leases, though it’s signed just four tenants thus far and is a long way off from beginning construction — if it ever gets there.
The property developers behind the Nashville project blasted MMPI’s LOI approach after the January groundbreaking in Cleveland.
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“The emperor in Cleveland has no clothes,” Cole Daugherty, a spokesman for the Nashville project, said at the time. “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 nonbinding 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.”
It’s an open question as to how relevant the LOIs vs. leases contrast is when the medical mart isn’t scheduled to open until late 2013. Eventually, MMPI will sign tenants and likely fill all the mart’s showroom space — though the quality of those tenants that’ll take that space also is open to question.
But, until the developer is able to tout signed leases, skeptics of the medical mart have one more piece of ammunition to cast doubt on the project’s viability — and that’s not making it any easier for MMPI to sell the untested medical mart concept to customers.
