The Great Recession was an especially difficult time for real estate, as many businesses paused their expansion plans. However, real estate experts Rob Walters and Mike Liyeos struck out on their own in 2008 to found a small-shop development company, Quattro Development. The timing wasn’t ideal, to say the least.
Even so, the duo managed to successfully navigate the complexities of financing and finding clients during one of the worst real estate markets in U.S. history. Walters and Liyeos explain the strategy they followed to come out stronger and more profitable on the other side of the 2008 financial crisis.
Gain Practical, Firsthand Knowledge of the National Market
Rob Walters and Mike Liyeos founded Quattro Development with the goal of becoming the premier small-shop developer for any business that needs to occupy a new space across the U.S. They knew they needed firsthand knowledge of U.S. real estate to find their first clients, so the pair spent their first year of business in research mode.
Walters and Liyeos traveled the country together, looking for ideal places to build for their future clients. “The first year we really spent just trying to be cheap and learn real estate around the country. Then we signed a couple of leases with a dental group out of upstate New York,” Walters says.
However, Quattro Development wasn’t immediately rewarded for its success. “Unfortunately, they ended up going bankrupt in the financial crisis and we were back to square one, but we had, by that point, made quite a few connections in the industry,” Walters says.
Walters and Liyeos found other high-profile clients thanks to the connections made during their travels. Today, they use their firsthand knowledge and business network to connect with more clients. “If we have a meeting with the head of real estate for Chipotle, we can talk to him intelligently about pretty much any trade area in the country. I think being able to talk about it with somebody who has that direct knowledge really goes a long way,” Walters shares.
Carefully Secure Financing
When they founded Quattro Development, Rob Walters and Mike Liyeos initially had two additional partners who agreed to fund the business. “When we started our company, we had an equity partner that was going to be our money. Mike and I did not have any money from our families and we hadn’t raised any. That was really what had us go out on our own and feel comfortable with it. They ended up going bankrupt. We had this business plan, executed on it, our tenant went bankrupt, and then, consequently, we didn’t have much of anything in terms of clients or money,” Walters explains.
After buying out the other partners, Rob Walters and Mike Liyeos were back to square one. “We went and just talked to anybody we could about getting equity for ground-up real estate projects, but it was the middle of the great financial crisis,” Liyeos recalls.
Undeterred, they persevered until at last, they found financing. “Finally, a guy gave us five names of potential equity partners and we met with four of them, and none of the four were interested in figuring out a fair way to work together. The fifth one ended up becoming interested after the fact and was very fair-minded. We struck a deal and ended up doing about 40 projects together,” Liyeos says.
Scale to a National Level With a Templated Approach to Work
Many real estate developers limit their growth because they focus exclusively on one market. In spite of Quattro Development’s small size, Rob Walters and Mike Liyeos knew national expansion was necessary to boost profitability. This might sound like an impossible task for a small business of just ten workers, but Walters and Liyeos found a way to make it function successfully.
Thanks to the processes they have in place, a hardworking team of employees, and a national network of relationships, the duo scaled Quattro Development to the national level. Their secret to success is simple: pursue large accounts with chain businesses and apply a cookie-cutter approach for sites nationwide.
“A lot of people think it’s really hard. They can’t believe that we do it all over the place and there are things you have to know,” Walters says. “Our tenants want to find a specific type of real estate. Historically, it’s been guys who want the Main and Main corner. Chipotle, Starbucks, the tenants that you see when you’re driving down by the mall and Target and Walmart. They’re right up there in your face at a corner. We’re able to take and cut and paste that knowledge across the country without having to know that much about the local market.”
Adds Liyeos, “We’re comfortable going anywhere and everywhere. But we try to keep the tenants the same and the building types the same.” Thanks to this approach, Quattro Development secured deals with Chipotle, Vitamin Shoppe, Aspen Dental, and many other national chain groups. “That got us through a really tough economic time,” Walters recalls.
Bracing for the Storm: Quattro Development’s Recession-Proof Approach to Success
Rob Walters and Mike Liyeos learned a lot from founding a real estate development business during the throes of the Great Recession. While the economy faltered, they persevered to create a small but thriving real estate development firm. To date, the company has completed over 150 projects across 31 states.
“There were a lot of times along the way where I felt like, ’Oh, man, if this one goes through, then everything’s going to be good. We’ll no longer be financially concerned. However, that day never seems to arrive. As long as you want to keep growing there are always going to be new risks and concerns so it’s always a little hard to sleep at night,” Walters says. No matter what the future holds, Quattro Development’s recession-proof strategy is sure to carry the real estate development firm to long-term success.
