It’s more than just a development project for Mitchell Schneider

Mitchell Schneider is an optimist.

“I believe things work out when you’re trying to do a good thing for everyone involved,” says Schneider, president of the commercial real estate development company First Interstate Properties.

“Does it always break that way? Not always. But way more often than not, it does. That’s my personal approach to the world. Not just to business, but to life in general. If what you’re trying to do is good for others, it can be good for you, too.”

Schneider has made his mark by creating large, outdoor retail shopping centers across Northeast Ohio that have changed the way people shop, eat and get together. Legacy Village in Lyndhurst has 10 million visitors each year. Steelyard Commons created more than 1,200 jobs in Cleveland and registers $250 million in annual sales. And the 838,000-square-foot Avon Commons serves more than 108,000 people within a five-mile radius.

One of the keys to his success is his ability to bring people together who can make these massive projects come to life smoothly.

“I’m a lawyer by training,” says Schneider, who earned his law degree from the Moritz College of Law at The Ohio State University. “I’m not an engineer. I didn’t grow up in the construction trades. So I really sought out people who had training that I didn’t have and who also had a similar attitude or approach to the world around them.”

Specifically, Schneider looks for people who established a strong work ethic in their teenage years and continued to develop that ethos as they got older.

“I love having professional leaders who grew up doing part-time jobs when they were kids — doing landscaping, working in restaurants, learning how to serve others and working for a tip,” Schneider says.

Networking is a critical skill for Schneider and has helped him launch his other big business venture, Legacy Capital Partners. The real estate private equity firm started up in 2004 and is led by Schneider and Co-Founder and Managing Director David St. Pierre. Since 2009, the firm has invested about $200 million in more than 13,000 apartments across the country through various funds.

Schneider attributes his success on all fronts in business to both his optimism and his reliance on faith, persistence and tenacity.

Broad perspective

Despite what others may believe, Schneider says persistence and tenacity are not the same thing.

“Persistence is the ability to keep working at something,” Schneider says. “Tenacity is not only to keep working at it, but to figure out new approaches in working at it. Those principles have driven quite a few memorable stories. One of them was Avon Commons.”

Avon Commons was built in 2000 in the rapidly growing city of Avon, which has jumped from 7,337 residents in 1990 to 23,054 residents in 2017, according to U.S. Census Bureau data. It has a number of anchor tenants and its proximity to Interstate 90 has helped it become a destination for shoppers in Lorain County.

But there was a time when it seemed like it wasn’t going to happen at all.

“We started out getting an option on a piece of land,” Schneider says, flashing back to the late 1990s. “I started meeting with members of the community, city council people and the mayor and so forth. I seemed to be developing a consensus around this land being a good location for a large-scale shopping center.”

Several months into the process, one of the community’s political leaders had a sudden change of heart.

“We learned there was a competing project and somebody else had gotten to this person,” he says. “Working over and around that initial piece of opposition was the first obstacle, making sure the rest of the council people and community leaders were still onboard.”

The disgruntled politician ultimately left office, but work on the competing project continued. What followed was a lawsuit that led to a court case that went all the way to Ohio Supreme Court, a charter amendment and a necessary zoning change that was rejected by voters. Schneider and his team regrouped, went back on the ballot and ultimately got the approval they needed to move forward.

“There are so many factors outside of your control in the real estate development process,” Schneider says.

“The trick to not making a mistake is to keep your field of vision as wide as possible. It’s not just the financial due diligence. It’s not just the exact location due diligence. It’s the demographics of the area and the region. It’s the employment situation in that area and region, and patterns of behavior that exist in those areas. Having the broadest view possible of the environment in total around a proposed real estate investment is key.”

A change in direction

Schneider had just finished building Legacy Village and was about to get started on Steelyard Commons in the early 2000s when he started thinking about his next step.

“Northeast Ohio had become saturated with large-format power centers,” Schneider says. “So I decided even before we built Steelyard Commons that it was going to be the last major shopping center that we were going to do. I was going to take a pause and see what we were going to do as far as further development.”

Legacy Capital Partners was an idea Schneider’s business partner, St. Pierre, had been thinking about for awhile.

“He had this idea to do a real estate private equity group that was open to smaller, individual high net worth investors, but not institutional capital,” Schneider says. “David and I got together and he wanted to run his idea by me and tell me what he was thinking about doing. He had crafted a business plan and when we met, I said, ‘David, this is a great idea.’”

The plan was for Legacy Capital Partners to back real estate developers doing development projects around the country. It provided Schneider with a way to transition some of his development team away from direct development work.

“We had an amazing due diligence team and we could give our investors the comfort that if something were to go wrong in an investment that we made, we had a team that could step in and take over a development,” Schneider says.

The firm had some projects under development when the recession hit in 2008, which changed the landscape, and the company’s approach, considerably.

“Before the crash, we had deployed about $50 million of capital that we had raised, maybe a little bit more,” he says. “In 2009, we switched our investment strategy entirely. What we began doing was investing in multi-family, middle-class apartment complexes that had some value-creation opportunity.”

The move fits in nicely with Schneider’s evolving mindset when it comes to his work — and his optimism for what Cleveland can become.

“We’re taking apartments that in many cases are less than what they could be and we’re improving them to provide a high-quality living space for working-class people,” he says.

“We have many hundreds of investors — it’s a private equity fund. To provide a great investment vehicle for investors and at the same time do good for the people who need those spaces is a great piece of satisfaction. It’s grown beyond the thrill of dealmaking to the satisfaction of serving the constituents that are involved in the transactions that we’re doing.”

Beyond the economics

One of his most recent projects was One University Circle, where he partnered with developer Sam Petros.

“This is the first luxury high-rise apartment building in the city of Cleveland in 40 years and it can help develop the neighborhood of University Circle,” Schneider says.

“It can serve as a catalyst for others to take the risk of doing real estate development in east side Cleveland neighborhoods. The building itself is inspiring to a lot of people, to be part of something that has meaning, beyond the economics and beyond the thrill of doing it, which is what I was getting in the early years.”

It’s that ability to make things happen and make his community a better place for everyone that drives Schneider. He also gets a lot of satisfaction from helping the people who work on those projects grow and develop. It all comes back to Schneider’s optimistic view of the world and his belief that people can accomplish a lot when you give them the chance to use their own unique talents.

“My goal has always been to help train people to take responsibility and to actually work at training myself,” Schneider says. “To delegate and to understand that people may not do something the exact same way I would do it. It may be better, it may be worse, but I’m very comfortable allowing people to grow, make some mistakes, learn and evolve in their own professional life. So over time, I’m able to give them more, allow them to grow into more and then allow them to train people below them to work in the same manner.”

Want to learn more about Mitchell Schneider? Check out our story in Smart Business Dealmakers.

The Schneider File

NAME: Mitchell Schneider
TITLE: President; co-founder and chairman
COMPANY: First Interstate Properties; Legacy Capital Partners

Education: Bachelor’s degree, with honors, in international political economics, law degree, The Ohio State University.

Active in the community: Under Mitchell Schneider’s leadership, First Interstate Properties has taken steps to strengthen the bond between its real estate projects and the communities they serve:

Steelyard Commons hosts National Night Out Against Crime each year in August and welcomes over 5,000 attendees during the four-hour event. First Interstate also paid more than $1 million to build one mile of the Towpath Trail, which runs through Cuyahoga Valley National Park.

First Interstate donated 22 acres of pristine land for a new city park, Oakwood Green, and provided more than $700,000 of funding to South Euclid for park improvements.

Nearly 30 acres of the 80-acre Avon Commons shopping center has been dedicated to a vast amount of lush green space. The grounds contain a recreational pathway and a gazebo for community entertainment events.

In conjunction with the grand opening of One University Circle, a donation of $100,000 was made to the Children’s Museum of Cleveland in support of its newest exhibit “Playlist,” an interactive art and music installation.