Welcome to the February 11 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 this is the news you’ll be reading about next month in the conventional media.
As always, we’ve made multiple calls/text message inquiries on these tips, which come from sources who are not merely insiders, but who have direct knowledge of the deals.
Last week was an incredibly busy week, with more good news than bad. But there are some dark, dark clouds on the horizon for our fair city.
Let’s start with the good news, including companies coming to town.
We told you last Thursday that Gazelle, a Boston-based company that buys and sells used Apple computers, iPads and current-generation iPhones and Droids, is considering Louisville operations. (Moving here, or opening its global fulfillment hub, depending on the source.)
• This is for real, and it’s a big deal. Eurofins MWG Operon, part of Eurofins Scientific, is starting an operation here servicing the University of Louisville and pharma clients. The fast-growing Brussels, Belgium-based Eurofins (30 percent revenue growth between 2010 and 2011) does DNA sequencing and DNA/RNA synthesis for research, according to our sources. Eurofins is moving into U of L’s MedCenter 2 Building at 1048 E. Chestnut St. The company already has multiple job listings for Louisville including DNA sequencing associates and laboratory assistants. This will be a 24-hour operation, with many third-shift ads on various jobs sites. Eurofins, which has gross revenue of more than $1 billion, chose Louisville because of the UPS World Port hub at Louisville International Airport/Standiford Field, an insider told us. Worldwide, the company has about 13,000 employees in 32 nations, working at about 170 labs.
• This one is a little weird. We hear from multiple sources that RAMM Technologies is moving to Louisville. RAMM makes a product called the Pill Guard, an opiate dispenser that is supposed to curb prescription abuse and accidental overdoses. The founders are Dr. Robert Muncy, a retired dentist, and Dr. Anthony McEldowney, an orthopedic surgeon, both of Lexington. Muncy and McEldowney have been floating this idea since 2006, according to media reports. Apparently, if someone tries to exceed dosage limits or tamper with the dispenser, the device uses rocket fuel to set itself on fire! Wow, that’s a hot product. Last month, RAMM executives applied for $200,000 in state incentives from the Kentucky Economic Development Finance Authority. According to the KEDFA filing, execs project investing $3.5 million within its first two years of operation and creating 20 new jobs with a total payroll of $2.6 million. The average hourly wage would be $90. Which is a LOT of money for a company that doesn’t appear to be cash-flow positive. Or to actually even exist in any meaningful way. Our sources say RAMM already has signed up for space in Bluegrass Industrial Park in Jeffersontown.
• Multiple sources are telling us not to be surprised if caterer and Avalon restaurateur Steve Clements resurfaces soon. Those sources confirmed Clements has toured NuLu and Main Street, looking at properties including The Marcus Lindsey. His sale of Avalon property at 1314 Bardstown Rd. to Silver Dollar partner Shawn Cantley is scheduled to close Thursday, giving Clements a substantial amount of capital to reinvest. Clements lost his 25-year catering contract with the Kentucky Derby Museum last June 27, then closed Avalon last July 1, one of the biggest restaurant stories of 2012. (Does this seem like a crazy past few months or what, with Avalon, then Lynn’s Paradise Cafe closing out of the blue?)
• This is an interesting story that just keeps getting more interesting. Last month, we told you JP Morgan Chase is moving its wholesale loan operation of Louisville, freeing up several floors of the Marion E. Taylor Building at Fourth and Liberty streets. The MET is owned by Toronto-based REIT Brookfield Asset Management. Well, now the 100,000-square-foot, 107-year-old building is about to change hands. Multiple sources confirm that Green Stone Asset Management based in Chicago has a contract on the building. Chase has at most about 70 employees on the first, sixth, and eighth floors of the eight-story building, and they’ll all be gone by the end of the year. Regus, the Luxembourg City-based temp office company, has had success with the seventh floor, leasing most of the space after a major renovation. What downtown doesn’t need now is another empty building. For two years, Insider Louisville has been documenting what started as a slow leak of businesses to the East End business parks starting with Humana back in August 2011. Since then, more residents have moved downtown, NuLu has caught fire and urban bourbon distilleries are in the works along Main Street. Yet, the city’s largest corporation has moved more operations to suburban office parks, with executives at Kindred openly talking about leaving Kentucky for several reasons, including the lack of cap on jury awards. Now, the 120,000-square-foot Nucleus building is coming on line this spring mostly empty. As we looked back on our coverage, it was clear downtown office space was going the wrong way for some time.
- The overall office vacancy rate in the Central Business District jumped to 12.3 percent at the end of the third quarter, in figures released exclusively to Insider Louisville by real estate brokerage Commercial Kentucky Inc. and its parent, Cushman & Wakefield. That was an increase from the 10.4 percent vacancy rate at the end of the previous quarter.
- We have a 15.3 percent vacancy rate in downtown’s Class A buildings, with vacancies more than doubling in only six months from 6.2 percent.
- HR consultant Mercer vacated 146,000 square feet in the Meidinger Tower and moved to 80,000 square feet in the Aegon Center last year. Do the math, and you can see this is a huge net loss.
- Meidinger is now more than 50-percent vacant.
- No one seems to mention that the Hertz Starks Building at Fourth Street and Muhammad Ali is on the market and the landmark Stewarts Dry Goods building, once the center of downtown retail, has sat empty for five years.
- In October, Commercial Kentucky reported more than 1 million square feet of unoccupied office space downtown, and less than 242,000 of that has been leased this year, in the brokerage’s hot-off-the-presses third quarter results.
- Preston Pointe and the Zirmed building are the only Class A office projects downtown since the Aegon Center was built 20 years ago.
The last thing Louisville needs as we exit the Great Recession is to lose downtown density – people on the sidewalks, in the stores, in the lunch places, in the coffee shops, in the restaurants and bars after work. There are still about 65,000 people working downtown. But think about this – in Manhattan terms, that’s one medium-sized skyscraper.
• Speaking of downtown, Bike Couriers Bike Shop owner Jackie Green sent out a missive last night at 9: 33 p.m. stating his business will “not abandon downtown.” The email referenced a Courier-Journal story Friday that aggregated what Insider Louisville has reported for the last three months, calling the rising downtown vacancy rate “the 21st Century’s version of last century’s ‘white flight.’ As long as investment in East End greenfield projects (commercial, residential and enabling infrastructure) continue, our urban core will suffer. The land use and transportation elements of the mayor’s ‘Sustainability Plan’ fall miserably short in addressing the flight.
From the email:
We (the Bike Couriers Bike Shop) could not abandon the city. We decided to reorganize the downtown (Market Street) bike shop and re-opened it. Last week we re-opened it (even though we still have not finished the reorganization of the shop). The decision to focus on downtown and the U of L area meant we had to close the Frankfort Ave shop. We don’t like having to leave the Clifton neighborhood and the great building that housed our Clifton shop for over four years, but…. We are seeking a buyer of the Frankfort Ave building.
• Another interesting factoid from the world of medicine is that Passport Health Plan, the Louisville-based Medicaid managed care organization, has gotten back nearly all its clients after state officials ordered Region Three, which includes Louisville, to put out to bid for competition. Our relentless colleague Dr. Peter Hasselbacher has all the facts at Kentucky Health Policy Institute:
I asked the Kentucky Department of Medicaid Services to provide me with current enrollment numbers in the four plans. Originally, the state distributed beneficiaries more or less equally among the plans. Beneficiaries were given an option to switch from their assigned plan for a limited period last December, and for a longer period through the end of March. Switch they did indeed! As of this week, Passport has corralled 64 percent of all beneficiaries,
We’re going to spare you why the Beshear Administration’s move to kill Passport was a terrible idea. But we think everyone involved – Democrats, Republicans, docs, patients, administrators, pharmacists and federal judges – views Kentucky’s haphazard switch to Medicaid managed care from fees-for-services as a fiasco. Remember all that money the Beshear Administration said they were going to save? Haven’t heard much about that lately, have you?
• Christopher Crider, the new General Manager of the Seelbach Hilton Hotel, is surveying employees about who they’d like to see the hotel recruit for the vacant Z Salon space on Fourth Street. Look for major changes this summer as Arlington, Va.-based Interstate Hotels & Resorts, the new owner, upgrades the historic hotel, with big changes in store.