Reshaping a Market: New Furniture Center Hits Vegas
By Heidi Genoist -- Tradeshow Week, 8/2/2004
The furniture industry is the latest to be enticed by the promise of Las Vegas, with the World Market Center scheduled to open 1.3 million square feet of exhibit space and launch a major tradeshow there one year from now.
As if this weren't enough of a threat to furniture-industry competitors in marts from San Francisco to High Point, N.C., tradeshow management firms are also getting into the game of turning Sin City into Furniture City for a week of events next July.
In the world of furniture marts, huge amounts of exhibit space are not extraordinary. The San Francisco Mart has 1 million sq. ft., the Dallas Market Center 7 million and the sprawling High Point Intl. Home Furnishings Market 11.5 million. But if all goes as planned, the WMC's 1.3 million sq. ft. in Las Vegas will be only the first phase of what will ultimately be 7.5 million sq. ft., surpassing many of its counterparts.
However, the numbers that really count are those that measure interest in all that space. The WMC reports it has leased Phase I of the building to 250 permanent tenants and expects another 250 temporary exhibitors to fill sprung structures that will help accommodate the first market July 18–22. Leasing executives say they've started a wait list for the permanent space in future phases. By comparison, the High Point Market boasts some 3,000 exhibitors, while San Francisco claims 300.
Randy Spak, CEO of Tupelo, Miss.-based Lane Home Furnishings, has leased 20,000 sq. ft. of the WMC and will not renew his lease in San Francisco when it expires this coming January. Spak said the company, owned by Warren Buffet company Furniture Brands Intl., does not need two showrooms in the West. Polled retailers in the Central, Southwestern and Western states overwhelmingly said they would attend a Las Vegas market.
"The facilities in San Francisco for the past eight to 10 years have slowly deteriorated," Spak said. "We expect huge attendance when Las Vegas opens."
The WMC isn't a surprise to the furniture industry. Founder and co-managing partners Jack Kashani and Shawn Samson, both experienced real estate developers, got initial project approval from the Las Vegas City Planning Commission in 2001. By the spring of 2002, they had commissioned a market study by the University of Nevada Las Vegas showing that three-quarters of the furniture retailers surveyed would attend a market in the city.
Ray Allegrezza, editor of Furniture Today Magazine (like Tradeshow Week, a Reed Business Information publication), assessed the WMC's potential impact on the competitive landscape by saying, "The jury's still out."
In May, the WMC secured a $191-million construction loan from Hypo Vereinsbank to complete Phase I. The project will also receive city property tax rebates worth $50 million over 20 years in exchange for funding infrastructure improvements.
Construction crews broke ground in March 2003. Once steel structures began to rise on the 57-acre site in downtown Las Vegas, the industry began to pay closer attention.
Many believe the older and smaller San Francisco Mart, which also holds its summer market in July, stands to take the brunt of the WMC's impact on the market.
Ellen Hall, a spokesperson for the 90-year-old San Francisco Mart, said the buzz has increased exponentially along with construction. "I think a lot of people were skeptical before about their financing, but now that it's under construction, there's a lot more serious talk about it."
Still, she went on, "We fully intend to be in the furniture market business another 90 years."
There are more pressing challenges than another newcomer to the business, she said. American manufacturers are concerned about importers dumping Chinese furniture on the domestic market. In addition, Hall pointed out, manufacturers are opening stores — some even with factory showrooms — to the detriment of distributors and retailers.
The WMC will not be immune to these challenges, but it will have an advantage none of its competitors has. "Las Vegas is the self-stated exhibition destination of the United States," Allegrezza said. "Obviously, the World Market Center people felt there was an opportunity there to do a different, or better job."
Others in town are jumping on the furniture bandwagon. Chris Meyer, vice president of convention sales for the Las Vegas Convention & Visitors Authority, said the bureau will be working with the WMC on housing and marketing. City officials like the project because it furthers downtown revitalization, and Meyer said it would help put heads on the beds of hotels being renovated nearby.
In addition, local show organizers are busy figuring out how to take advantage of the traffic heading their way next summer. Bentley Group Intl. earlier this year launched the Intl. Furniture and Accessories Marketplace at the Las Vegas Convention Center, and has moved the event to coincide with the WMC's semiannual tradeshow.
Triad Global Expositions, headed by Louisville, Ky.-based show organizer Stephan Phelps, is preparing the July 2005 launch of the Las Vegas Furniture Show at the Sands Expo & Convention Center — adding 300,000 sq. ft. of furniture exhibits in town during the WMC's first market.
What will all this activity do to the heavyweight High Point Market, which takes place every April and October? Tammy Covington, director of operations for the High Point Market Authority, said the country's oldest and largest furniture gathering is keeping up with the times.
"We do have infrastructure issues," Covington acknowledged. "In a city like High Point, there's not going to be enough rental cars to service the 70,000 people that come here." In response to logistical and operational challenges, the city and showroom owners banded together two years ago to create the authority. Its accomplishments so far include state funding to provide shuttles to and from 110 hotels within a 35-mile radius of High Point.
"We've put some things in place that have made it easier for people," Covington said.
