Clearing begins for Vegas mart
List of tenants includes 73 more names
By Clint Engel -- Furniture Today, July 14, 2002
LAS VEGAS — Developers of the proposed World Market Center here have released a list of 150 signed tenants, revealed some details on financing and given a first look at site clearing work, moves they hope will eliminate any lingering skepticism about the $1 billion project.
Seventy-three of the tenants for the 1.25 million-square-foot first-phase building are newly released and include San Francisco market regulars such as Best Chairs, Golden Oak, Legends and Lifestyle California (see list on page 44).
All told, 165 companies have signed for 835,000 square feet, surpassing what developers said was their goal of leasing 70% of the space in the building's eight market floors, said Shawn Samson, co-managing partner of the project along with Jack Kashani.
Some tenants have not given WMC the go-ahead to release their names, including a handful of the Top 25 manufacturers, Kashani said.
About 200 companies have committed to space in the first phase. Construction is set to begin by the end of this year, and developers say the first furniture market will be some time in 2004 with more than 500 tenants in 1.5 million square feet — about 250 permanent exhibitors and another 200 to 300 temporary exhibitors.
Kashani, Samson and their Alliance family partners have spent about $18 million since the project was conceived less than two years ago, $13.2 million for the land and nearly $5 million for marketing, leasing, the hiring of a project team and other early expenses.
Lining up the financing
They have secured more than $5 million in development financing from lead lender Bank Leumi, a European bank that has an extensive business relationship with the Alliance family.
And more than $100 million in construction financing is in the works, the developers said, noting they have preliminary commitments from two unnamed U.S. lenders, and that both commitments are expected to be firmed up before the end of the year.
At the 57-acre downtown site near the intersection of Interstates 95 and 15, a tractor has been clearing and leveling the vacant property. Actual grading will begin by the end of the year, Samson said.
"The project was at one point characterized as a 'dust-up in the desert'," said Kashani, an apparent reference to a remark made in the Greensboro (N.C.) News & Record this spring by Chris Kennedy, president of Merchandise Mart Properties Inc., which has extensive showroom holdings in High Point.
"The only dust going up now is from the earth being moved to build the massive complex," Kashani said.
But getting to this stage has not been easy. Since the project was announced 19 months ago, the World Market Center has garnered mixed industry reactions ranging from avid fans to others, largely executives of established markets, dismissing the project as "pipe dreaming," "a non-starter" and a "mirage in the desert."
Even the City of Las Vegas and its mayor, Oscar Goodman, seemed hesitant as the developers' bid to secure tax rebates was put off time and again last year. Goodman was described repeatedly by one Las Vegas newspaper as being "lukewarm" on the project.
"In the beginning I was," he said in an interview this month in his office, saying he didn't understand all the ins and outs nor what the city could do to help. Goodman reportedly had been burned before by businessmen with grand plans for downtown revitalization that never materialized.
"As I found out what my power was, I became not just an advocate of the project, but now I can't wait for it to be built," Goodman said.
Samson and Kashani call the WMC the largest commercial construction project in Las Vegas. But Goodman said he'll reserve that title until ground in broken.
Mayor ready with grease
Nevertheless, he called the World Market Center "vital" and said, "It's a whole industry overnight that we don't have, and it will spawn whole other industries."
Goodman said he would do what he could to expedite the construction planning and permit process.
"Anybody who does business with the city on a project that I want, I will personally walk them through the process and grease it like a pig," said the colorful and popular mayor, who spent much of his career as an attorney representing reputed organized crime leaders in the city.
Samson, Kashani and their leasing team believe they've cleared the toughest hurdles. In November, the city council voted unanimously to provide tax rebates worth more than $50 million over the next 20 years to offset infrastructure costs.
And leasing has gained speed recently, they said.
Babs and Russell Blair, WMC leasing managers who have been on the job here for about nine months, and General Manager Dave Palmer, hired a bit over a year ago, have leased more than 800,000 square feet and have commitments for over 1 million square feet that they expect to seal soon.
"That proves how much merit this project has," Babs Blair said. "We couldn't have accomplished that if (WMC) was not warranted."
Samson and Kashani said exhibitor space at the first market will be at least 50% larger than the space currently dedicated to the home furnishings industry at the San Francisco Mart.
One knock against the WMC has been the lack of major tenant names released to date. Kashani and Samson said five of the U.S. market's Top 25 manufacturers have signed on, and three more are expected to do so shortly. Only two — Standard and Pulaski — have been identified because the others don't want to be named yet because of various internal reasons, the developers said without elaborating.
Samson said five industry associations have approached WMC about leasing blocks of space to cluster member manufacturing companies. That's likely to happen in the second phase, he said, but he wouldn't identity the organizations.
Kashani said he is confident the permanent market space in the first phase will be fully leased by the time the steel starts coming out of the ground this winter.
They said they have had discussions with leading downtown and strip hotels regarding market package rates that would start at $29 a night. They're also talking to an unidentified airline in an effort to develop complete airfare, hotel and rental car packages.
Kashani said they also are looking into securing a number of suites for top buyers and exhibitors that the WMC would offer without charge. "It would be a marketing cost (for us)," he said. "It would be like advertising."
Meanwhile, the building permit process is beginning, a team of architects and engineers has been assembled, and site clearing has begun. Leasing of the second-phase 1.25 million-square foot building will begin as soon as the first phase is under construction, the developers said.
"It's time for suspension of disbelief," Samson said.
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| The World Market Center's Dave Palmer, left, Russell Blair, Babs Blair, Jack Kashani and Shawn Samson at the site of the proposed 7.5 million-square-foot home furnishings market center. Site clearing has begun and construction on the first building is expected to start by the end of the year. |
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