Sam McNulty’s ability to imagine beyond what is — and see what couldbe — is why he’s found success as a real estate developer, investor and restaurateur.
“There’s a lot of personal satisfaction in taking old historic properties that are in bad shape and fixing them up,” says McNulty, whose success stories include the revitalization of Cleveland’s W. 25th Street.
The founder of Market Garden Brewery, McNulty’s Bier Markt, Bar Cento, Speakeasy and Nano Brew Cleveland always has several irons in the fire. His latest venture is upscale urban townhouse development Duck Island 7, a project that began as “an abandoned, empty parcel of land that was nothing but gravel and mud,” but McNulty now describes as “the connective tissue joining the hot neighborhoods of Ohio City, Tremont and the Flats West Bank.”
In this week’s Dealmaker Q&A, we talk to McNulty about his approach to dealmaking, the value of strong partnerships and his keys to success.
How do you approach dealmaking?
A lesson I’ve learned on dealmaking is just being open and honest with the people you’re working with. That’s indispensable. In game theory terms, I look at the neighborhood we’re working to build as a positive-sum game where the rising tide does indeed lift all ships. The folks who look at life and business as a zero-sum game tend to be the ones who are driven by greed.
There are quite a few ideas rattling around in my brain at the moment. The question is, will pursuing these opportunities and projects bring joy? That's the litmus test that will determine whether to pursue the next thing — whatever that thing may be.
How do you keep projects moving forward?
I’m very fortunate to be surrounded by a lot of great people, including my business partners, Mark Priemer, Mike Foran and Andy Tveekrem. As is always the case, there is no one person behind any business success. It’s a group effort. I really enjoy working with my partners and colleagues and the interaction of taking on a challenge. Once you get everybody rowing in the same direction, good things can happen.
Everything we’ve done here on W. 25th Street, we’ve done together because we have such a strong partnership. We trust each other implicitly and work so well together. We have complementary skills, and we’ve been lucky enough to never need to bring in investors.
What’s the key to finding success in real estate investment?
The nationwide macro shift from the suburbs to urban areas is only going to continue. I’d rather invest on the right side of that historic trend. Companies that have built massive headquarters in the suburbs — like Progressive Insurance, for example — are going to find it increasingly difficult to gain and retain talent. GE understood that and left its leafy suburban campus for the intellectual foment of Downtown Boston.
There is a real opportunity in Cleveland to build Class A offices in key locations, like the transit-oriented development that's going in at the corner of West 25th and Lorain in Ohio City.
What’s a common challenge when identifying real estate investment opportunities?
When you’ve been around remodeling, rehab and construction for a long time, you can see the potential more than folks who haven’t been around it. But not everyone can see it. I remember one building in particular that has six units, all identical. I’d have one unit completely rehabbed in pristine shape with everything looking gorgeous.
I would advertise the unit across the hallway that was a mirror image. I’d walk the prospective tenant through the remodeled unit and say, ‘This is what it’s going to like, it’s just not there yet.’ Then I’d walk them across the hall and say, ‘This is the unit I’m renting. In three weeks, when you’re looking to move, this will be completely done.’ Over the years of doing that and taking people through partially remodeled homes and other units, never once did someone say, ‘I see what you’re going to do, I see the vision. I’ll take it.’ They couldn’t see past the current state to see what the potential was.
How do you continue to hone your skills?
I read a ton. I’m an avid reader of the local and national newspapers and trade magazines. Learning as much as you can about the world around you, all aspects of it, is important. Having good awareness, knowledge and experience certainly helps versus people who do business completely by the numbers. That tells part of the story, but it doesn’t tell the whole story.
When my business partners and I first opened McNulty’s Bier Markt there in Ohio City in 2005, people thought we were crazy. It’s a dangerous neighborhood — it’s downtrodden. Why are you investing in a neighborhood that is going nowhere? We took these abandoned forlorn pieces of real estate and breathed new life into them. There’s a lot of satisfaction in that. I’m not just talking about the financial gain but hopefully leaving the world a better place than we found it.
