Last week, Mayor AC Wharton opened the possibility that Peabody Place might be a good opportunity for increasing Memphis' convention space on the cheap.
Peabody Place officially closed in 2011, though it was a ghost of itself near the end. Since its closing, there have been reports that the building would be redeveloped by Belz Enterprises into a combination of suites and convention space.
There's no question the site should be developed into something. The question is what? Mayor Wharton thinks the answer is a convention center. Is that a good idea? Let's start from what the city needs and work backward.
What the city wants/needs: Here are several schools of thought as to what the city's convention business needs. Spend a little time in the Cook Convention Center and your first instinct will be — a modern convention center.
That modern space doesn't have to equal the $650-million Music City Center in Nashville. The harsh reality is, we don't have the hotel rooms downtown to justify a space that big. Increasing the number of rooms downtown should be the main goal, and it will take time. Occupancy downtown is a little below the national average, and the Average Daily Rate (ADR) is low. Until this changes, developers aren't exactly going to flock to downtown Memphis.
Any of the three options under discussion — revamping the Cook Center, building a new convention center, or turning Peabody Place into a convention space — could bring more space and hotel rooms, but if the goal is increasing hotel capacity, the Peabody Place proposal has some competitive disadvantages.
Stacking the deck, public-private partnership style: The convention business makes money on two things: room rentals and catering. The space is just the means to an end.
If the idea of expanding the amount of convention space is part of a long-term plan to also increase tourism and the hotel room count in the city, then you may not want to build your space on land that is controlled by a large hotel operator. It creates a competitive advantage for the host hotel. It can bundle services (catering and rooms), which means other hotels are left in the lurch.
Another area of concern is the space itself. The ceiling is mostly glass, and there's a huge atrium area that's uneven and concrete, which means it will have to be leveled.
These aren't deal breakers, but there are structural concerns that have to be dealt with for a convention space that an atrium-centered mall doesn't have to worry about.
The 300: the myth of many small meetings: In an interview, Mayor Wharton spoke of a "niche market" of 300- to 500-person conventions that the city could seek out. It's true, the 10,000-person convention market is small and very competitive. It's also true that most conferences include fewer than 1,000 people. But there are some problems with Wharton's premise.
First, no one builds with an eye toward the small market. They make large spaces that can be tailored to smaller meetings when necessary.
Second, any space should represent growth from the current convention center. Peabody Place is 300,000 square feet. The Cook Center is 350,000 square feet. There's no question that adding Peabody would add much-needed space, but it doesn't build on what we lack. It adds to what we're already not utilizing.
Finally, Peabody Place is land-locked. There's no room to grow in the future to accommodate new meetings, and the growing size of meetings that we currently host.
If we did build a new building, even half the size of Music City Center, we should make sure we have the space to expand — just in case.
Our ultimate goal should be bringing more hotel rooms to Memphis so we can compete for other things like an NBA All-Star game, a political convention, or whatever the next opportunity holds.
As for Peabody Place, if Belz Enterprises wants to redevelop it into something like Wharton's vision, they should go for it. It's not like they weren't thinking about it already.
But there's a reason Belz Enterprises hasn't already turned Peabody Place into the very thing Mayor Wharton is proposing, and that's because it's just not feasible for them at this time. And that doesn't make it look any more attractive as a public project either.