Longtime developer Andy Chafoulias looks to Rochester's future
Titan Development & Investments CEO Andy Chafoulias has been making changes lately, spurring speculation that he is less enthusiastic about doing business in Rochester in the wake of the recent death of his father, legendary developer Gus Chafoulias. In an interview this week, Chafoulias dispelled those theories, saying that he remains committed to the community, even as he grows his company nationally.
As Rochester’s economy starts to recover from the pandemic, a longtime local developer reflects on the past and looks to a future.
Titan Development & Investments, a national firm based in Rochester, has long been a business leader in the local community.
Now led by CEO Andy Chafoulias, Titan is built on a foundation of Chafoulias companies dating back to legendary Rochester developer Gus Chafoulias and his grandfather Andy Chafoulias before him.
Chafoulias has been making changes lately, including moving Titan's office out of his H3 building in downtown, selling off a local commercial real estate firm and helping longtime Titan executive Mark Steege break off and launch his own company.
These shifts have led to speculation that Chafoulias is less enthusiastic about doing business in Rochester in the wake of his father’s recent death.
In an interview this week, Chafoulias dispelled those theories, saying that he remains very committed to Rochester.
Walk me through how you and your father joined forces when you returned to Rochester eight years ago? How did Chafoulias Cos. transition into Titan Development & Investments?
“I built a FedEx distribution center in Tallahassee, Florida and I named it Titan. My dad loved that. He loved that name. And I said, ‘if we ever work together, I’d rather work underneath a brand than a family name. A brand is easier to build and sell than a family name. That’s how we changed from Chafoulias Cos. to Titan.
I'm proud of our journey together … You know, the biggest year we had in Rochester was 2018 when we built the Hilton hotel together.
We had a great, great eight years together. It was a lot of fun."
During the pandemic, many commercial properties saw a lot of changes. How did Titan’s properties in downtown Rochester and elsewhere fare?
“What I'm proud of is that we never lost one tenant.
It was a tough time, but I worked with the tenants and they didn't have to pay rent for several months. I'm proud of that. Some of my competitors have asked how I kept from losing tenants. I say I spent a lot of money making sure I kept them.
I figure, if you're getting kicked in the head, you might as well really get kicked in the head.
Of course, I’ve never been through this, but my common sense and my gut said to do what I did … And so far, it's worked out. My father always taught me you got to use your head, stick your neck out, and work your ass off...
I am very proud of all the employees we have here. We have hundreds and hundreds of employees. And I'm proud of every one of them. Because it takes a team to make a great company, not one individual. "
You recently moved the offices of Titan out of the sixth floor of your H3 building in downtown to an office space in Southwest Rochester. Why did you make that move?
“I did move Titan out of the core, and the reason I did is because I've made a lot of changes with Titan.
What I'm proud of is that I attracted a new company called ISG to Rochester, Minnesota. I found a new company to come to Rochester, Minnesota and stay in the core. ISG moved into the former Titan space.
I want to be a leader and show that the downtown is still strong. The downtown is still very attractive. The downtown is not dying. I just demonstrated it, because I was willing to move my offices to attract a brand new company...
It's so upsetting to me to see these legacy companies like Smith Schafer, AMPI, Kemps, Sterling Bank and Valor, not only move out of the core, but move out of the city...
I still have a downtown office with my hospitality company, Avra, in downtown. And I have an office with Titan. So I get to have the best of both worlds. So, I didn't go anywhere."
In 2020, you sold Paramark Real Estate Services, a Rochester company you founded when you were 24. Why did you sell that?
“I didn't feel that I was bringing the value to Paramark that I once did. The company has been making some fundamental changes. I wanted them to make those changes and not have me be hanging around as a pain for them. And so I sold them, and I wish them the very best."
Mark Steege, an executive who worked with you and your father for 28 years, recently left Titan and started his own commercial real estate company called Titan360. How did that come about?
“His wife is retiring soon, so he was looking for a change. When he and I were talking about what I call our next life together, I told him that I wanted him to take a brand that will sell. So he is using the name, but he owns 100 percent of Titan360.
He's earned everything that he has. He has worked hard for it. You couldn't find a better person.”
How interested is Titan in doing more development in Rochester right now?
“We’re still very interested. This will always be where it all originated. We’ll never lose sight of that. My family has been a big part of this community, since my grandfather arrived here.
And I'm going to make sure that we continue to be a big part of the community. We will continue to develop here and we will continue to create and attract new businesses and industries, though we will also have a national focus."
Titan has a large national footprint with projects all over the Midwest as well as Texas, Florida and the East Coast. Some developers say it is more difficult to build in the Rochester area compared to other cities. Do you agree with that?
“It's not as easy ... It's expensive and it's bureaucratic and ... it's difficult. There are many other places where it's easier to develop assets than in Rochester, Minnesota. They need to make it more welcoming to developers...
Rochester is not a joyous place to develop. But we work through it, because we enjoy the city and we enjoy the public stakeholders...
What the city should be doing is ... helping developers stabilize their assets and not worry about getting that tax dollar right away. The reason I say that is because once you build a new building, they're going to be collecting taxes... for decades and decades, decades.
They get too caught up in the front end, when they should look at the big picture. If we're going to do a project, we're going to build the tax base responsibly. We're going to hire employees for great jobs. And we’re going to pay a lot in taxes.
It is absolutely and totally irresponsible that it takes 12 to 14 months to get a permit. That should happen in three weeks. Sometimes we act like we're New York City ... We're Rochester Minnesota.
I think Alison Zelms (Rochester's new city administrator) understands the problems. I endorse her. I think she’s going to help address these issues.”
Your company Avra develops and manages hotels across the country. What is your take on hospitality in Rochester?
“When it comes to hotel rooms, I think we are over inventoried…
The city administration, the DMC and the city council should be responsible and not approve any more hotels for a while...
I have the goal of building another hotel here and expanding our portfolio. But at this time, the market can't support it...
We never just build another building. We're going to build a building with purpose. We’re going to build buildings to fill voids.”
What are the business opportunities that you see in downtown?
“Looking ahead, I think that there's room for an urban grocery store, maybe a pharmacy,
I would love to see the University of Minnesota expand their high tech classrooms. I think there's an opportunity for more student housing. And I think there's more opportunity for affordable housing.
Before the pandemic, we had a vibrant, incredible downtown. It is my personal mission to see this become vibrant again. And that's why I've invested millions of dollars.
I don't think things are moving as fast as they should be, because we don't have time to sit and think. We don't have time for more studies.”
As a community leader, what do you think about the future of downtown with less people working there in the wake of the pandemic and the push for working remotely?
“Again, Mayo gets the blame, because they supposedly took all these people out of downtown. My response to that is Mayo has a business to run right now. We can't tell Mayo how to run their business, because we want Mayo to be here for decades...
I have been talking to the city administration about the economic impact. It’s not just Mayo employees. Smith Schafer, Sterling Bank, Valor have also left or are leaving downtown.
I have faith. I trust that Mayo is going to make the right decisions, not only for the institution, but for the city.”