Reaction to Deal Positive
Heath E. Combs -- Furniture Today, May 27, 2011
HIGH POINT - Reaction around the industry was mostly positive as High Point and Las Vegas welcomed new investors in their home furnishings showroom buildings.
But some suppliers still have reservations about how the new ownership structure will affect their lease rates and services at the markets.
Simply put, there are still a lot of unknowns.
International Market Centers, registered as a corporation in Las Vegas, last week announced that it will own about 59% of High Point's active showroom space, at a cost of about $457.5 million. It also said it was acquiring all the World Market Center buildings in Las Vegas, pushing the deal's total cost to $1 billion.
Bob Kelly, president of sales at solid wood casual dining manufacturer Canadel, said the Las Vegas Market still has work to do to become more competitive. His company decided not to renew its lease in Vegas after this winter's show and plans wait and see what happens with the new owners.
"They're going to have to get more of the stores we consider our retailers, which are medium and medium highend stores. And if they don't get more medium to medium high-end upholstery manufacturers, those stores aren't going to come. That's what we need," Kelly said.
He expects the International Market Centers group will likely offer packages to show in both markets and will try to push more exhibitors to Las Vegas. But buyers don't necessarily want to visit four shows a year, he said.
"I think people will go to High Point one show and Vegas another show. We don't need all these shows. We can't react. It's impossible to react with all these shows, especially as a manufacturer," Kelly said.
Kevin O'Connor, chairman of the High Point Market Authority and president and CEO of Samson Marketing, which oversees the Universal and Legacy Classic brands, said he believes the deal will be good for the industry.
"They obviously feel the home furnishings industry is a good place to be," he said of the financial backers of International Market Centers. "They feel they bought the real estate right and that's a healthy thing. It's never healthy to have your buildings in Las Vegas and High Point in receivership. It takes the cloud off of what's going to happen to the buildings."
O'Connor also believes that the High Point Market Authority has been a vital ingredient to the market over the past several years, particularly in its role of securing funding for a market transportation system and establishing better communication and information sharing among buildings.
"The part I really want to make sure everyone understands is that the market authority under (former President) Brian Casey's leadership and the board's leadership has emerged as a strong entity that really runs market," he said.
O'Connor added that the Market Authority had a solid supporting role in the success of High Point's Premarket, an informal event held a month before the April and October markets that showcases upcoming product introductions. He said he expects Premarket will continue.
"Retailers love it because it allows them to shop their major resources in a relaxed environment, it's cost free and it really enables them to make better buying decisions," O'Connor said.
Albert Lin, vice president of Signature Home Furnishings, which exhibits in both High Point and Las Vegas, said he hopes the showroom deal will lead to lower lease rates. But he said he realizes the investors are in the leasing business to make money, which could affect how much of a break exhibitors might get on leases.
"They need to make their money. I don't fault them for that. That's what they need to do. But it's becoming a big burden on all these manufacturers to have all this excess showroom space," Lin said.
Metal beds manufacturer Wesley Allen has owned its High Point showroom building at 100 N. Hamilton St. since 2004. The company also shows in Las Vegas in World Market Center Building C.
He added that the Los Angeles- based company does a strong business on the West Coast and sees a lot of customers in Las Vegas.
"I would like to see both (markets) survive," he said. "Whoever owns it, I would like to see them make it more competitive for both markets. I think that would be good for the industry. Instead of fighting like cats and dogs, they can get along like a family."
But while he wants to see Las Vegas succeed, he believes it will need to be more economical for exhibitors.
"Most people won't have a future (there) paying the kind of rent they are paying unless the economy picks up," he said. "Even though they like it, the bottom line is the bottom line."
Brian Edwards, president of case goods and upholstery manufacturer Fairmont Designs, which also shows at both markets, said the news is a positive development for the industry.
"I think it's great for the industry from the standpoint of the unification of these two diverse markets," Edwards said. "If we can all somehow see the vision of a better industry through the cooperation of the markets, the tenants and the retailers, it's all worth it."
Phil Haney, president and CEO of Lexington Home Brands, which has showrooms in both locations, said the new ownership likely will erase any animosity between Las Vegas and High Point.
Haney believes this animosity may have caused some major exhibitors to side with High Point, where they've shown for years, over Las Vegas. Now, he hopes that more of his competitors decide to show in Las Vegas, which he believes would increase traffic at the show.
Although some in the industry don't see the need for four markets, Haney believes each show needs to have two markets a year to remain viable.
And while Lexington largely sees a lot of smaller independent dealers and designers in Las Vegas that don't shop High Point, it also sees some of its largest dealers there too.
"It's not just a nice thing to do," he said of the company's decision to show in Las Vegas. "It's a driver of business for us."
Mendenhall Station, the transportation terminal the High Point Market built with the help of millions of federal, state and local tax dollars, is an example of the improvements made in High Point after the Las Vegas Market emerged as a competitor.
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