Chaim Schochet represents Optima Ventures, which owns roughly 2.8 million square feet of office space and a stake in a hotel in downtown Cleveland.
CLEVELAND, Ohio -- Chaim Schochet is like many other 25-year-olds.
Married less than two years. The father of twin boys. A potential first-time homebuyer, weighing his native Miami Beach, Fla., against the low cost of living in the Midwest.
But Chaim Schochet is unlike any other 25-year-old in Cleveland.
He's one of downtown's largest landlords, an investment executive responsible for roughly 2.8 million square feet of office space owned by U.S. investors and the principals of a Ukranian business conglomerate.
In downtown Cleveland, he might be the most important guy you've never heard of.
Now Schochet (pronounced Show-het) has reluctantly agreed to step into the spotlight, participating in his first in-depth interviews since becoming the most aggressive buyer of buildings in the center city.
Since 2008, when Optima Ventures bought the chisel-shaped One Cleveland Center tower on East Ninth Street, Schochet has been its man on the ground.
Now Optima, a private company based in Miami, owns four office buildings here and a stake in a hotel -- making the company a bigger player in the downtown office market than Cleveland-based real estate giant Forest City Enterprises Inc., according to data from local brokerage firms and regulatory filings.
Business associates describe Schochet as a hands-on operator, focused on understanding Cleveland and forging connections with key players in the city. In person, he's shy. And restless, as if he'd rather be doing business than discussing it.
It's not hard to see why some people interpret his reticence as aloofness, his strong opinions and sarcasm as cockiness.
But Schochet is engaging, particularly when talking about his dual goals in Cleveland: Making money for investors betting on the upside of a Midwestern city, and contributing to the betterment of a downtown that more high-profile buyers have passed by.
"When you own one asset, you really are not contributing anything to the city," Schochet said, explaining Optima's investment philosophy. "You're just collecting rent.
"The way we like to operate is we like to get ourselves knee deep -- if not, I mean, the way we are in Cleveland is almost neck deep -- in the market," he added, "so we can understand where the market's heading and how we can help improve the market and make changes in the market."
A family connection helped to get consideration
Born and raised in Miami Beach, Schochet didn't follow a traditional road to the real estate business.
"I've always had a thing for architecture," he said, "which is how I got into what I'm doing. I always was fascinated when they put up big buildings, little buildings, monumental buildings. And then, I guess, from that it evolved into wanting to work with them. Real estate was probably the best entrance for me, without having to spend lots of time in architectural school.
"I do some sketches and some drawings of my own," he said, laughing, "but I doubt any of them would pass code approvals."
Instead of studying buildings, Schochet attended the Rabbinical College of America, in Miami, New York and Toronto. A member of an Orthodox Jewish movement called Chabad -- and very private about his religion -- he graduated with a degree in Judaic studies in 2006.
The sixth of eight children born to Obie and Sheva Schochet, he recalls a busy, loud household. His siblings, now ages 20 to 36, are among his closest friends. They gather several times a year, from locations as far-flung as Istanbul, where one of his four sisters does humanitarian work.
After college, Scochet headed to Singapore and spent a year traveling and volunteering in Asia. Then he returned to Florida and joined Optima Ventures, a real estate investment business owned by the leaders of Optima International of Miami and the principals of the Privat Group, one of Ukraine's largest business and banking groups.
"A family connection helped to get me initial consideration," Schochet said, referring to Mordechai "Motti" Korf, his brother-in-law and a co-founder of Optima International. Corporate records show that Korf and businessman Uri Laber formed Optima International in 1994.
"But I'm on my own here, and I -- and I alone -- am accountable to our investors for my decisions and my work," Schochet added.
In eastern Europe, those investors have ties to distribution, mining, manufacturing and the energy business, including refineries and oil and gas production companies. They've owned and sold a telecommunications business, a cement factory, office buildings and hotels.
In the United States, they've focused on steel and raw materials. Through various companies, Optima International controls businesses including Warren Steel Holdings, a casting mill northwest of Youngstown; Felman Productions Inc., a West Virginia plant that produces additives to purify steel; and manufacturing facilities spread from New York to Texas.
In 2007, the investors launched Optima Ventures to diversify into U.S. commercial real estate, though the group recently put money into a daily-deal website called 1SaleADay. Schochet, who is not a principal, was circumspect about discussing how the company is structured or who the major investors are.
A document provided by Optima to some downtown Cleveland office tenants in 2010 said that the founders of Optima International owned 33.3 percent of the real estate operation. The principals of Privat Group owned the rest.
But they're not the ones in Cleveland, eyeing acquisitions, searching for tenants and learning the landscape.
That's Schochet, who has gained a reputation as an aggressive, quick-thinking deal-maker, at his best in face-to-face conversations and informal settings.
"He loves to get out into the market, walk through other buildings, meet people," said Brian Hurtuk, a first vice president with the CBRE real estate brokerage in Cleveland. "You wouldn't necessarily see Chaim at a huge real estate event, but if you talk to him and you rattle off names of other owners in town, other developers, key attorneys, he's pretty much made the rounds."
Optima now owns more than 5 million square feet of real estate in the United States. Schochet spends much of each week traveling or camped out at the Cleveland Marriott Downtown at Key Center, between trips home to Miami Beach to see his wife, Rachel, who "takes care of my two babies."
When he gets a break from managing buildings, he's thinking about house prices and what's best for his sons, Eliyahu and Yehuda.
"It's deciding where you want to move, how you want to move, what you want to build, new construction, existing," he said. "With a wife it's a whole new picture."
'One of those people who love to make a statement'
When One Cleveland Center hit the market, CBRE flagged Optima Ventures as a potential suitor, said Andy Banister, a first vice president who handles investment properties out of the brokerage's Indianapolis office. Optima already had ties to the steel industry near Youngstown, and the company, which was eyeing office acquisitions in other markets, was willing to consider deals in less-glitzy Midwestern cities.
Optima bought the 31-story office building and garage for $86.3 million in May 2008. Since then, Schochet has struck deals to buy 55 Public Square, in the center of downtown; the Huntington Building, at East Ninth Street and Euclid Avenue; and the Penton Media Building, at East Ninth and St. Clair Avenue.
Talk to people who have worked with him, and the first thing they'll mention is Schochet's age -- startling for someone who controls such a large portfolio. His thick beard does little to conceal his youthful face. And he seems more comfortable in jeans and a rumpled button-down shirt than a suit.
During an interview, he's nervous, joking and glancing toward his iPhone. But in business, he's known for being confident, taking any setback as a mandate to work harder. Despite his shyness, he's just as likely to provoke or challenge his audience as he is to listen.
"He's one of these people who just love to make a statement," said David Browning, managing director of the CBRE office in Cleveland. "Maybe it's an outrageous statement. And he throws it out in a conversation in order to get a reaction. That's part of his style."
Ari Maron, the 33-year-old developer whose family turned East Fourth Street into a restaurant and residential district, has met with Schochet several times. Both men are young players in a downtown shifting from old-guard owners to more varied investors. Both took a circuitous route to real estate -- Schochet through Judaic studies and Maron by way of a music degree.
"It's funny," Maron said. "I said to Chaim, 'I think it's actually really positive for the city, and really important, to have not only young people but people who come from cities, who understand how cities work.' Here's a guy who spends a lot of time in Miami, who has spent some time in New York, who understands quality urban place. And I think it's really a coup for the city to have someone like that investing."
In October, Optima entered its first joint venture, buying the 472-room Crowne Plaza Cleveland City Centre hotel on St. Clair Avenue with Sage Hospitality, a hotel developer and manager based in Colorado. The partners are planning a $64 million renovation of the building, now closed and set to reopen as a Westin in 2013.
Other investors passed on the project before deep-pocketed Optima signed on, said Ken Geist, a Sage partner who handles acquisitions and development.
"We went out to three national loan brokers, and they would not even let us hire them to find us debt in Cleveland," Geist said. "Optima has said, 'If there's not any debt, we'll just build it all cash. And then put the debt on once we prove it.' "
Neither Schochet nor Geist would say how much money Optima is investing. But Schochet has his hands in everything, from negotiating with lenders to choosing tile and fabric swatches for the new hotel.
"He has an eye for taking things that people don't necessarily see as desirable and doing something with them," said Mark Vogel, a local investment banker who has worked with Schochet on several deals and went to his wedding in Brooklyn, N.Y.
That trait, Vogel added, "is more art than business."
Optima has become a 'market-maker'
Ask why Optima is focused on a "second-tier" or "third-tier" market like Cleveland, and Schochet is quick to argue.
"I'll give you a two-tier answer to that," he said. "One is that some people like to call these secondary markets, but in these markets your returns are better. Your ability to make money is better.
"The second part of that answer is that I would probably argue with a lot of those investors that call this a secondary market," he said. "In my short few years that I've spent here, I think I've seen a lot of transformation. I don't know which one of those, as you say, top-tier markets has as much investment going into their downtown as downtown Cleveland."
Institutional buyers often focus on major cities, where the rate of return on real estate might be lower but steady investor interest makes it easier to sell property after a few years. In smaller Midwestern cities, buyers like Optima can get more stable returns -- but it's hard to get in and get out quickly.
To succeed in Cleveland, property owners need to do more than take a long-term approach, real estate experts say. Downtown real estate is all about relationships: reaching out to a public sector that doesn't necessarily approach you first; building a large enough portfolio to get noticed; and meeting the right people to help you fill buildings.
"In the first year or so, I believe that Optima really was struggling to make deals in the market with new tenants," said Browning of CBRE. "You can't read about this market in order to know how you need to position yourself."
Nearly four years in, though, Optima has become a "market-maker," Browning said, citing the company's diverse acquisitions -- buildings that appeal to a range of tenants -- and Schochet's frequent presence in Cleveland.
"It's refreshing to have someone be so active in Cleveland," said Vogel, of Pinnacle Financial Group in Independence. "Listen, the goal of business is to be profitable and make money. But I can tell you that he's a person who cares about the city of Cleveland and wants it to do well."
In its riskiest move, Optima acquired the Huntington Building in 2010, paying just $18.5 million for the 1.3-million-square-foot property. Looming vacancies -- the building is half empty -- contributed to the low price. Huntington Bank has moved across downtown, and accounting firm Ernst & Young and law firm Tucker, Ellis & West will leave in 2013 for a new office building on the east bank of the Flats.
Schochet won't discuss details of his plans for the building. But the real estate community expects him to chase big government tenants, including Cuyahoga County, to fill the vacant space. The county plans to solicit proposals in April from property owners and developers interested in buying county buildings or housing county offices.
"It's going to be an open process, and everybody will have the opportunity to apply," said Matt Carroll, chief of staff for Cuyahoga County Executive Ed FitzGerald. "And no decisions have been made."
'His fondness for this city is really apparent'
During Schochet's first visit to Cleveland, someone offered to drive him from East Ninth and St. Clair to PlayhouseSquare.
"I laughed when I saw it was three blocks," he said. "Your entire downtown would be like Midtown in New York. Yet how many districts do you have?"
Schochet believes a more connected, fluid downtown would be a step toward success for Cleveland. From an outsider's perspective, he sees historic buildings and attractions that should feel like a short walk, instead of a car ride, away from each other.
He sees rich history and culture, offering a high quality of life at a lower price than many other cities in the United States. Yet when he's flying from Miami to Cleveland, and back, he said, he sits next to Clevelanders who seem unhappy or disappointed about their home.
"His fondness for this city is really apparent," Deb Janik, senior vice president of real estate for the Greater Cleveland Partnership, said of Schochet, who has sought guidance from her during the past two years. "And I asked him: 'Why Cleveland? Why now?' His perspective was that it's a market where acquisition was possible. But, also, it was really his description of the city. He loves the historic nature of the buildings, the density of the city."
That doesn't mean Optima will buy everything it sees here.
Schochet considered, but walked away from, the former KeyBank Center at 800 Superior Ave. And Optima negotiated to buy 200 Public Square, the former BP Tower. But Schochet said he couldn't reach a deal with the seller. Real estate brokers say the property has been taken off the market.
For now, he's focused on filling buildings and expanding Optima Management Group, a property-management company that he runs across Optima's portfolio. Asked about what comes next, Schochet shrugs off the question.
At 25, he's too busy to speculate about the future.
Plain Dealer News Researcher JoEllen Corrigan contributed to this story.
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Optima's downtown Cleveland properties
Click the shaded properties for more detail.
Rich Exner, The Plain Dealer