In real estate the finished product is often more than the sum of its parts.
That’s the case at Terrex Development & Construction LLC, started by three real estate professionals with widely different backgrounds and none of who is a native Cincinnatian.
But partners Tom Rowe, Peter Horton and Matt Packer, who worked together at Miller-Valentine Group, shared a strong entrepreneurial desire to build their own business.
Since launching Terrex two and a half years ago, they’ve found success taking on diverse, high-profile projects such as plans for a $50 million condominium tower at Eight and Main streets downtown, plans for a high visibility office building off the Norwood Lateral, and the new Children’s Theatre of Cincinnati.
Despite their different backgrounds and skills, the partners say they compliment each other well.
“If we all thought the same, we might get to decisions quicker, but in the long run thinking about it differently and challenging each other allows us to do some great things,” says Horton.
What are your backgrounds?
Rowe: I’m originally from Michigan and grew up in real estate. My dad’s a developer and I worked for him through college, sold real estate and ran a development. I went to law school not to practice law but to prepare for a business career. I found out most companies didn’t view lawyers as business people and so I earned an MBA at night while attending Loyola University in Chicago. My wife’s family is from Cincinnati and we really fell in love with the city during trips here to visit and moved here in 2004.
Horton: I’m from Columbus and went to UC and graduated with an architecture degree from DAAP. I worked for an architecture firm in Chicago a few years. I decided to change career paths and wanted to get into real estate development. I came back to Cincinnati working for an architecture firm and got my real estate license and took investment management classes looking for an opportunity to get into real estate development. Miller-Valentine offered me a position in business development, which wasn’t exactly what I looking for but it presented the opportunity to work for a real estate development group. I enjoyed it and spent nine years there.
Packer: I’m from Canandaigua in upstate New York. I came to southwest Ohio to attend the University of Dayton where I earned an engineering degree and met my wife. I joined Miller-Valentine right out of college and worked for them for 20 years on their construction executive team, eventually leading their Cincinnati operations.
Horton: The awesome fact about Matt is that he and his wife have eight children. And having a guy with Matt’s construction background allows us to have a construction services offering that has been a big part of our success.
There are a lot of real estate development companies in Cincinnati. How have you tried to differentiate Terrex?
Rowe: As a developer you distinguish yourself by having creative ideas and seeing something others don’t. The magic of real estate development is identifying a site maybe used by industry today but that could be an apartment building tomorrow. We decided relatively quickly after we started that we’d need capital. We had conversations with different partners and Messer Construction Co. happened to be one. They were looking for what we had and we were looking for what they had in terms of capital and customers. We serve Messer clients in Indianapolis, Columbus, Dayton and Cincinnati. We work with their key clients on opportunities and we’re developing our own opportunities in Cincinnati.
Horton: Developers typically gravitate to a certain asset class or product type. Instead of being focused on a certain asset class, we’re more focused on urban core opportunities.
Rowe: The reason we like urban core is not just because we see the market turning that way but typically urban projects are more complex, more sophisticated and harder to get done. Getting back to our expertise, we’re able to navigate the complexities of urban projects.
Construction services are one of your strengths. How does that work in practice?
Horton: A good example is The Children’s Theatre in Hyde Park. It was design-build meaning The Children’s Theatre contracted with us and we hired all the professionals to develop the project. We helped manage the design, we helped manage budgets, and, more importantly, we handled the construction. We took them through a whole site evaluation. Looked at different buildings and ran through real estate pro formas to determine the best return on investment. We did a site analysis and helped with incentive negotiations. We put them through everything we’d do for our own projects and make the soundest financial decision. We looked at it as almost a fiduciary responsibility on our part to deliver the best possible results for The Children’s Theatre. They didn’t have an owner’s representative or somebody in house who could manage all that.
Packer: Cost was extremely important because they had raised only so much money and didn’t have any more money to spend. They had to maximize what they could do.
Rowe: The great thing about Matt is that he’s very focused on managing costs throughout the process. That helps on the development side because lower costs helps us on the returns and gives the customer the benefit of that thinking. It’s not just building what the plans say, but challenging the plans to drive value for customers.
What are your growth plans?
Rowe: We’re all passionate about the projects we work on and we do this to work not to manage teams of people. Our stated goal is to never have more than 20 employees.
Horton: We have five full-time people including ourselves now, and a few others we use on a contract basis. We all have a passion for doing projects and we want to be involved in that. You don’t need to have a thousand people to do well.