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Developer is invested in Janesville

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Photo by Bill Olmsted

Eric Schwartz of Sara Investments participates in a Westgate economic development meeting at Forward Janesville in January.

Photo

Photo by Bill Olmsted

Eric Schwartz in the chaos of the remodeling of his Helgesen Building in downtown Janesville. Schwartz, of Sara Investments, owns millions of dollars of Janesville real estate and is currently updating the E. Milwaukee St. structure top to bottom.

JANESVILLE — Eric Schwartz is a fast-moving, impatient sort of guy.

Fast-moving describes his past as a racecar driver who once turned down an invitation to qualify for the Indianapolis 500 because it required a hefty time commitment.

Impatient explains his decision to drop out of UW-Madison as a 19-year-old.

"Every single day, I'd stand at the corner of Park and University and watch people go to work," he said. "I was jealous; I wanted to go to work, too."

That impatience lured Schwartz into a boom-and-bust career as a Madison restaurateur and eventually into real estate development.

But Schwartz has plenty of patience in Janesville, where his Middleton-based company has invested about a quarter of its $80 million real estate portfolio.

The 52-year-old Schwartz bought his first Janesville building in 2003. The former Coca-Cola distribution facility on Fulton Street is now home to a food ingredient manufacturer.

He bought one of his more recent—the Helgesen Building at the corner of Main and Milwaukee streets—last summer.

"Bought it the day the street flooded and GM announced they were closing," Schwartz said. "That's a little bit of 'Oh my!'"

Schwartz's Sara Investment Real Estate has paid $11.4 million for property and buildings in Janesville. The company projects another $11.7 million in development costs for its local holdings.

Schwartz invested in Janesville before its recent economic downturn, but he's one among a handful of developers continuing to pump money into the local economy.

Evidence is no more apparent than at the Helgesen Building, where Schwartz is spending more than $4 million to transform the five-story office building into an anchor of the downtown's redevelopment efforts. The building will include entire floors dedicated to individual tenants as well as a floor to incubate small businesses in offices as small as 150 square feet.

His approach is straightforward: buy low, sell high. Or as billionaire investor Warren Buffet put it: buy on fear, sell on greed.

Schwartz, however, isn't scavenging the community's carcass. The "sell high" part of the cliché assumes an economic rebound in Janesville.

He's banking on it.

"The people in Janesville feel so badly beaten down, but I don't think they realize their own resiliency," he said. "They're very determined, and what's very cool is that stuff is still being made in Janesville. The workforce is a cut above."

Schwartz knows a thing or two about bouncing back.

In 1978, the college dropout opened his first Upstairs Downstairs Deli on State Street in Madison. A number of other successful restaurants followed, as did the purchase of his first property in 1988.

"When I went to the banks for Upstairs, I was told we would be the first restaurant in Madison to break the $2 barrier for a sandwich," Schwartz said. "We opened and had lines out the door all the time.

"You can imagine the ego that gave me. Ego's good in proportion, but mine was way out of proportion."

So, too, were his books.

After starting 25 restaurants, Schwartz found himself strapped with $1.7 million in debt.

"Pretty terrifying, especially with four young children," he said. "I met with every one of my creditors—secured or unsecured—and said 'I don't know how, but I will pay you back.'"

It took 10 years of principle plus interest at 8 percent, but Schwartz made good. It also took the support of the only person willing to believe in him—his wife, Sara—whom he named his real estate company for in 1997.

Within arm's reach of his desk overlooking the West Beltline, he keeps a binder of the repayment details.

"Instead of 'Chapter 11,' my staff calls it 'Chapter Schwartz,'" he said.

The results also could be filed under 'Lessons Learned.' It was through his expanding restaurant business that Schwartz acquired a passion for real estate development.

"I found that renovating buildings and then opening a business was what was really fun," he said during a recent tour of the Helgesen Building. "This stuff really gets me jazzed."

That's the crux of Schwartz's business today: buying and developing neglected buildings into profitable retail, office and industrial businesses.

Sometimes, his ventures are vacant pieces of land. Sara closed in November on a 10-acre property next to the $140 million hospital and clinic SSM Heath Care of Wisconsin and Dean Health System plan to build on Janesville's east side.

"There are things going on in Janesville," Schwartz said. "SSM and Dean are making a pretty big bet."

The two groups recently said tight credit markets will delay the project a year. That's OK, Schwartz said, because he and his staff have a lot of irons in Janesville's fire.

Sara staff members are frequent visitors to—and participants in—the community. They've been particularly active in the Westgate Business Corridor group that formed a couple of years ago to promote economic development on the city's west side.

"I've never been in any situation with Eric where he didn't consider people first," said Steve Scaccia, president of Freedom Plastics and the driving force behind the Westgate group. "If Eric could do something for free, he would just to make everyone else happy. I've honestly never met anyone so selfless.

"He's fallen in love with this community and really cares about its people."

It helps that Janesville is a short drive from Schwartz's home in Oregon and his office in Middleton.

"Quality of life for my employees is a big deal to me, so we don't do much past a two-hour drive from Middleton," he said. "Janesville is nirvana for us because it's almost a home game."

And it's a home crowd for Sara's staff, said Schwartz, who is effusive in his praise for city officials.

"Janesville is so pro-business," he said. "We're all on the same side, working together to improve things, create jobs and more investment and therefore more taxes.

"They get that in Janesville. I don't know if they'd get it at 3 percent unemployment, but from my experience, it's not a new religion in Janesville."

Schwartz and his staff are big on giving back in the communities where they do business. They're nearing the end of a multiple year commitment to reenergizing the Madison-based Childhood Development Inc., a non-profit organization that offers the children of working parents an early childhood education.

"Charitable work and helping others is really what gets us excited," Schwartz said. "It's a bedrock of business because it teaches us to think of other people.

"From a business perspective, making others happy is what I want to do. They already know I want to make money, but they're genuinely surprised when I can make them happy."