Welcome to the January 21 edition of the top-secret, always confidential Monday Business Briefing.
These are biz tips Insider Louisville staff and contributors have collected during the past few days, a few of which are NOT double-verified as with our daily reporting.
But as always, we’ve made multiple calls on these tips, which come from sources who are not merely insiders, but who have direct knowledge of the deals.
Consider this the “one conversation leads to another” edition of the Monday Biz Briefing:
• Let’s start with an update: Don’t look for Lynn’s Paradise Cafe to sit empty, turning into the Highland’s version of the Azalea property on Brownsboro Road. To our amazement, our phones haven’t stopped ringing, with call after call into Sunday from investors, commercial real estate brokers and business brokers asking how to get in touch with Lynn Winter. To our further amazement, the majority of parties told us they’re interested in preserving the Louisville landmark, either because they love it, or because they see a viable business opportunity worth sustaining. Though not everyone wants to maintain the status quo. A story we anticipate following for months ….
• In the course of talking to commercial real estate titans, we found out about the impending arrival of H & M, the Stockholm, Sweden-based fast-fashion giant. After we posted the story Thursday, several sources called or emailed to say that H & M will go to the second floor of Oxmoor Center, where efforts are afoot to clear out local tenants and replace them with what are termed “national credit tenants.” Those are the big brands of big national and international companies – H & M for example – with the resources to keep paying the lease even if they decide to close the store. (Well, unless they go into bankruptcy a la Circuit City and Borders Books.) The story we missed last week is what we’re being told is the ongoing reconfiguration of Oxmoor by General Growth Properties. Circling back, so more as we know more. But we would like to note that Louisville’s retail roll continues. The more Trader Joe’s, Apple stores and other great retail we add to already vibrant arts and entertainment, restaurants and music scenes, the easier it will be to lure talent to Louisville.
• Now, the not-so-fun return to reality. In the course of talking with those commercial real estate brokers, we got a reality check on downtown. This morning, our Steve Kaufman has an overview of where downtown office space stands, and truth is, it ain’t pretty. With the pending departure of Chase Bank operations from the Marion E. Taylor Building at Fourth and Liberty and Humana’s exodus to the ‘burbs, the Class A vacancy rate is climbing. This spring, 160,000 square feet of space will come on line in the Nucleus building. (That’s about four acres under roof.) Commercial brokers told Steve that because Nucleus has never announced research tenants, they plan to count it as office space. Less people working downtown means less business downtown, which is not a good thing if you want a healthy city. As Commercial Kentucky’s Phil Scherer told Steve, “Businesses won’t move downtown just because the rents are better or the concessions are generous. You have to buy into the idea of a thriving, functioning central urban core. We have to promote downtown as an environment unlike any other, a place for excitement, fun, networking – the whole work-live-play mindset.” Our biggest concern is luring an important retailer downtown. But after long talks with commercial real estate brokers, no national retailer is likely to go downtown without city incentives. Our sources say retailers hew closely to proprietary market analysis formulas that crunch data such as population density and per-capital incomes, then produce a “yay” or “nay” recommendation. Which is why H & M goes to the suburban mall in Louisville rather than to the urban center as they prefer to do all over Europe. The good news is, we confirmed Target looked several times at vacant space in the NuLu area. The bad news is, the line to Target apparently has gone dead.
• Speaking of Nucleus, we hear from Insiders that the CEO at MetaCyte Business Lab departed a week ago. Nucleus will take over. MetaCyte, a life-sciences incubator, is in the MedCenter3 building at 201 E. Jefferson St., which has been in the news lately. Last month, the CJ and Biz First reported a stop-the-presses story– a “string of new companies” moved in to Nucleus Innovation Park-TechCenter, bringing it to capacity, with a total of 130 employees! Well, make that 129. What we figured out is, Nucleus Innovation Park – TechCenter is in fact “MedCenter3,” owned and managed by the University of Louisville Foundation’s Nucleus affiliate. Nucleus CEO Vickie Yates Brown pointed to the development as proof that Nucleus is running out of space, and will fill up the new building at Market and Floyd streets way before it opens. What no one reported – and what VYB didn’t mention – is that whatever the name, MedCenter3 is a decade old. We hope U of L officials don’t consider reaching full occupancy at 10 years as a laudable achievement.
• Speaking of downtown real estate, Grisanti Group’s newsletter last week lists the Meyer Building at 624 W. Main St. building. Our sources tell us the 6-story building has been on and off the market since 2009. We don’t have any interest in the building one way or another, but the size, prime location on Main Street and asking price caught our attention. The owner – the CLMS Properties group of real estate investors –is asking $1.1 million for a 23,000-square-foot building, which has about 19,000 square feet of leaseable space. Which equals about $58 per square foot. Couldn’t build a comparable building for four times that. The reason why we’re noting this is, with all the interest in building downtown bourbon operations, this seems like a bargain for the right buyer .
• We heard Doe-Anderson has gotten a number of big advertising contracts. So we started asking around. Sure enough, people started forwarding a Doe release stating the advertising firm has been named agency-of-record for Bluegrass Cellular. Doe will handle advertising and design, public relations, media planning and media placement for the cellular/wi-fi provider. Doe also got contracts from Pinnacle Entertainment and Kentucky state gov. Pinnacle Entertainment, which owns and operates seven casinos including Belterra Casino Resort in Florence, Ind., has contracted Doe for its customer relationship management program, “mychoice.” The total dollar amount in capitalized billings for these projects is about $10 million. (We’re not even going to try to explain the arcane “capitalized billings” formula.) Doe hired 18 new employees in 2012. Which is pretty good these days. The 100-year-old firm is best known as the genius behind decades of Maker’s Mark campaigns.
• By the way, that could be a big ol’ piece of business from the state. Doe has been chosen to help brand Kentucky’s new health insurance exchange, mandated by the Affordable Care Act. How big a deal is this? Well, we told you back in December, former Health and Family Resources Cabinet Secretary Janie Miller is tasked with organizing the Kentucky Health Cooperative with the help of a $58 million loan from the feds. Last Thursday, the Feds added another $183 million to build the network, which is scheduled to be up and running in 2014. We know Miller both leased space in the Forrest Green office park and began hiring top officials last month. The Obama administration advocates the exchanges, which will essentially be online networks where insurers can pitch the public, and consumers outside of networks can select the best offers. Branding this brave new world could be a pot of gold for Todd Spencer and Co.
Biz Briefing Briefs:
• University of Louisville officials will announce this week the replacement for Dr. Manny Martinez Malonado. Malonado departed as executive vice president of Research and Innovation back in 2009. Our sources say it won’t be Dr. William Pierce, Jr., the interim executive VP. Last week, U of L officials named Craig H. Blakely as School of Public Health and Information Sciences dean, so they’re on a roll.
• A lot of talk in the surrounding neighborhood about the former Nold garage building at 1133 Bardstown Rd. being renovated into a bar. (The building had housed the Amazing Grace health food store, then Aladdin Food Mart, a Halal butcher.) A very large bar, say sources, and a big investment. Our sources say no food. This could be a trend since the Big Bar at Bardstown and Lucia has been a huge hit for a tiny space.
• Cincinnati-based Kroger is having a huge April meeting in Louisville. Sources tell us Kroger, which pretty much owns the Louisville supermarket market, may begin introducing subidiary brands here including King’s Sooper and City Market. Which we never heard of. At least one source said don’t be surprised if Kroger decides to put one of these smaller concepts downtown.
• Our sources say Food & Wine magazine is working on a big story about Louisville’s restaurant scene. We know the story is coming, but we hear differing versions as to whether it will look at the over all scene, or focus on NuLu. We know … what’s the big deal? Louisville is in every publication every week from the New York Times to Southern Living. But this is a little different. Food & Wine is part of NYC-based media conglomerate Time Warner. But the mag is aimed at a more – how shall we say it? – prosperous and cosmopolitan audience than, say, Southern Living. More on the level with Saveur and Bon Appetit. Every positive article is an antidote to that whole barefoot hillbillies on Meth image.