Vegas furniture mart worries competitor

Diana Sahagun

Monday, May 20, 2002 | 11:55 a.m.

The proposed Las Vegas wholesale furniture mart is causing ripples through the industry, as many prominent retailers are scurrying to become part of the project.

While ground has yet to be broken on the 57-acre project west of downtown, the developers of World Market Center have signed leases for nearly 80 percent of the first phase, including some tenants that could be coming from San Francisco.

The ability to attract nearly 200 tenants, industry experts say, is a sign that the Las Vegas furniture mart is poised to capture much of the West Coast market now served by San Francisco. The mart promises to bring millions of dollars into the city's coffers.

"The reality is that Las Vegas is fresh, new, highly accessible and, in the minds of prospective tenants, offers real and perceived advantages," said Ivan Saul Cutler, industry analyst and former vice president of the San Francisco mart.

Recent news reports and a local survey have shown the Las Vegas furniture mart could threaten San Francisco's mart, where retailers -- mostly from western states -- visit the sales showrooms to purchase furniture for their stores.

According to a March survey by the University of Nevada, Las Vegas Center for Business and Economic Research, 90 percent of the top 200 furniture retailers said they are likely to attend World Market Center, selecting Las Vegas over San Francisco as their preferred market.

The survey asked 200 of the top furniture retailers -- including Ethan Allen, IKEA, Levitz Furniture and Pier 1 Imports -- whether they would choose the Las Vegas mart over San Francisco.

"It's the equivalent of a mercantile earthquake to the San Francisco mart, if Las Vegas becomes a reality," Cutler said.

The San Francisco Business Times last month reported that developers from the World Market Center have signed leases with furniture manufacturers who for more than 50 years have shown and sold their wares in San Francisco's mart.

Michael Gennet, president of San Francisco Mart, is discounting reports that his mart could be in danger, saying he's uncertain whether the Las Vegas plan will come to fruition. Gennet did say there is not room for two West Coast marts.

Several San Francisco mart tenants have signed leases with Las Vegas, but they called it a "defensive move," Gennet said.

"No one in the industry is fully confident that the World Market Center will ever be built as a furniture mart," Gennet said.

While competition is brewing, R. Keith Schwer, director and professor of economics at UNLV, said it's healthy, especially if it is in Las Vegas' favor.

"The conclusion I read from (the survey) is that is that the furniture mart in Las Vegas will be competitive," Schwer said. "And competition is good as we have seen over the last decade for consumers. It shows that the furniture mart in Las Vegas is good for consumers and it will be good for Las Vegas."

Shawn Samson, leasing partner for World Market Center, said he's aware of the competition with San Francisco but said the city's mart will be successful because it is positioning itself as a regional, international market. The commitments from prospective tenants alone show the Las Vegas mart could become the premier West Coast market, he said.

"It is an incredible amount of commitment from signed leases when you consider the building is not even there yet," he said. "This is because everyone is convinced that Las Vegas is the place to hold a market that will attract not only regional or national tenants, but also international tenants and buyers.

The first phase will be a 1.25 million-square foot tower on 36 acres west of downtown bordered by I-15, Grand Central Parkway, Bonneville Avenue and U.S. 95. At full build-out, the project is proposed as a multi-tower, 7.5 million-square foot complex covering 57 acres.

The furniture mart is being built with the help of the city of Las Vegas, which last year granted the developers a 50 percent property tax rebate over the next 20 years, estimated to be about $40 million.

Samson said the project has lease commitments from 180 tenants, representing 950,000 square feet.

Ground should be broken on the project by winter with an opening of the first phase in 2004, Samson said.

"We think that the project will be an economic engine for downtown," he said.