JayMarc getting its house in order to resume growth
by ROBERT CELASCHI, Puget Sound Business Journal
Supplement to the Puget Sound Business Journal
October 24-30, 2008

It has been a roller-coaster year for JayMarc Development, a Renton company that creates single-family and multi-family housing projects on relatively small parcels of land.

“In this line of business, it is one for the record books in terms of highs and lows,” said President Marc Rousso.

The company had a string of highs as JayMarc posted 151 percent growth in revenue over the three years ended in 2007. This year brought a low with a downturn in the economy: Revenue will probably reach about $1.2 million, a mere 13% of last year’s number.

“I remember someone once told me that obstacles and challenges are necessary for success, and victory only comes after you have struggles and countless defeats,” Rousso said. “But after those struggles it sharpens who you are in the business. You get through it and you become a better business. That’s what we are doing as a company.”

In some ways, JayMarc is returning to its roots. In 1995, Rousso and co-founder Jay Mezistrano started out buying decrepit houses and fixing them for resale. That got the two men in the mindset of improving underused assets.

In 2000, they started applying the same idea to land, looking for small developable parcels owned by families and organizations. In 2004, they went into land development full time by opening JayMarc, concentrating on the Renton area. They caught the market on an upswing.

“It was kind of like we hit a lot of singles when we were in our mid-20s to our late 20s. We probably had 20 or 30 singles. Then we learned how to hit a double. It was accumulation,” Rousso said. “You do it long enough; you eventually are going to be successful.”

Now they are back to looking for fixer-upper houses. They don’t see this as a crash, however. The JayMarc staff never got larger than six people and two of those were independent contractors, Rousso said.

The company has only had to scale back to four people. The business model has been less about making transactions and more about building relationships with landowners, even if they don’t want to sell for several years.

“My partner and land acquisition person are out there every day talking to landowners,” Rousso said.

And the founders are already at work on bigger plans, looking to put together a $40 million fund to buy land. With institutional investors and other, JayMarc hopes to get back on the growth track.

“We would have been a $40 million business in 2010 if we had kept on the path,” Rousso said. “With the fund, we will be a far bigger company than we would have imagined.”

The emphasis on personal relationships has been ongoing for both Rousso and Mezistrano.

“They are very open to learning and growing, from anybody and everybody, in all areas of their life,” said Sol Avzaradel, owner of the John L. Scott Real Estate office in Renton where Rousso once worked. “They were even flying around the country going to classes for personal growth and development and financial management.”

They were able to find some good people with backgrounds in land development who helped them through the fast growth, Avzaradel said, and their good ethics and values should help them get through the tough times.

Rousso has a history of getting people together. He serves on the board of the Seattle chapter of the Entrepreneurs Organization and helped put together a group to match entrepreneurs with mentors.

His relationship-build includes working with local governments on land development issues.

“I have interacted with them in various jurisdictions in the South End,” said Garrett Huffman, government affairs manager for the Master Builders Association of King and Snohomish Counties. “Just knowing what’s going on and what jurisdictions are best to work with goes a long way.”

The meetings with government officials give developers a chance to improve processes for land development before there’s an immediate problem. JayMarc, Huffman said, has embraced innovations such as so-called new urbanism neighborhoods that feature walkable streets, small community centers and other aspects that encourage neighbors to interact.

“They have obviously embraced the compact urban housing, the cottage housing. That adjustment itself shows a great deal of their maturity,” Huffman said of JayMarc. “They are progressive-thinking, which is what I have been most impressed at. The South End hasn’t been the quickest to embrace that. A lot of my larger members, that’s just not their niche. They like coming in with a large swath to clear and grade.”

JayMarc is likely to flourish if it can weather the current storm, Huffman said, “And I expect they will.”