Jan. 17, 2005 - American cities are flooding the market with new convention center space, even as the trade-show industry is contracting, a phenomenon likely to leave the landscape littered with underbooked big boxes, according to a study released Monday.

The Brookings Institution report comes as projects are under way or under consideration at McCormick Place and in Schaumburg, Lombard, Peoria and Rockford.

"Localities, sometimes with state assistance, have continued a type of arms race with competing cities," Heywood Sanders, professor of public administration at the University of Texas at San Antonio, stated in the study he authored.

Spokesmen for local projects said extensive planning and research indicate their undertakings are headed for success.

The $850 million West Building at McCormick Place, to open in 2008, "is a very strategically designed building," said Billy Weinberg, a spokesman for the Metropolitan Pier and Exposition Authority, which owns and runs the nation's largest convention center.

The goal is to capture meeting business, particularly from medical associations, during the city's peak seasons, when the rest of McCormick Place is heavily booked with trade shows, said Christopher Bowers, chief executive of the Chicago Convention and Tourism Bureau, which sells space at McCormick Place.

Bowers said they involved potential customers in the design process.

Yet, said Sanders, who is perhaps the nation's most vocal critic of convention center proliferation, "every one of these cities sees themselves as inevitably succeeding, and even today they are not."

Public spending on convention centers has doubled in the past decade, from an average of $1.2 billion a year in 1993 to $2.4 billion in 2004, the study found.

Between 1990 and 2003, exhibit space has grown 51 percent, to 60.9 million square feet. And 40 cities are building or planning to build more space, adding another 6 million to 7 million square feet.

Meanwhile, attendance at the 200 largest trade shows peaked in 1996 at 5.1 million, then headed downward, reviving somewhat in 2000 and then turning down again. In 2003, it hovered around 4 million, about the same level as 1993, the report states.

"Almost every convention center in the country operates at a loss, not even counting construction costs or debt," the report stated.

And many convention centers are responding to red-hot competition by discounting or waiving rental rates, making it harder to cover their operating costs, it noted.

The downturn in the economy at the start of the millennium, together with the shock waves from the Sept. 11 attacks, contributed to these trends. Not only have the historically dominant players such as Chicago, New York, Atlanta and New Orleans been hurt, but also fast-rising stars Las Vegas and Orlando.

Yet economic recovery may not lift the industry back to heyday levels and beyond, Sanders' study found.

Consolidation in such industries as hardware and housewares will hurt attendance on an ongoing basis, as will increasing use of electronic communications and corporate America's seemingly endless love affair with cost-cutting.

"The overall convention marketplace has shifted dramatically, in a manner that suggests that a recovery or turnaround is unlikely to yield much increased business for any given community," Sanders stated in the report.

Bowers, of the Chicago convention bureau, has a more optimistic view, noting that 18 pieces of new business have been booked already for the West Building.

And by 2006, business at the existing complex should return to the robust levels experienced in 2000, he said.

Meanwhile, the Pier and Exposition Authority, through spending reductions that included 83 job cuts in 2003, has trimmed its deficits, Weinberg said.

The operating deficit for the fiscal year that ended June 30 was $7.8 million, down from the $12.7 million that had been projected in the budget. And the authority projects an operating loss of $4.3 million this fiscal year.

"Now we're within striking distance of a balanced budget," Weinberg said.

Optimism reigns in Schaumburg and Lombard too.

"The village conducted feasibility studies and had independent third parties look at the facility, and, based on their projections, we believe it will be successful," said Brian Townsend, assistant village manager in Schaumburg, where a $226 million convention center/hotel project will open next year.

With 100,000 square feet of exhibit space, it pales in size relative to McCormick Place and its 2.2 million square feet, and the Donald E. Stephens Convention Center in Rosemont, with 840,000 square feet.

"We're really targeting the regional market," said Townsend. "We're not looking for big trade shows or conventions."

Lombard's $177 million hotel/conference center project, slated to open in early 2007, is aimed at attracting meetings only, with 50,000 square feet of conference space but no exhibit halls.

"We are meeting the market demand identified by our studies," said Village Manager Bill Lichter. "There is a definite lack of conference space in DuPage County."

Elsewhere in Illinois, the Peoria Civic Center is to undergo a $55 million facelift and expansion by 2007, and Rockford is weighing construction of a $60 million-plus convention center.Tribune photo by Chris Walker

Ironworker Venus Boykin ties steel rods at the $850 million West McCormick expansion project, due to open in 2008.

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