Written by Liz Wolf
July 30, 2014
Opus becomes powerhouse again after comeback following recession
There’s no question that the recession hit commercial real estate developers hard, and Minnetonka-based Opus Corp., now known collectively as The Opus Group, was no exception.
While Opus had developed some of the most high-profile buildings in the Twin Cities, it nearly went under during the 2008-09 real estate crash. However, with the real estate market in a recovery mode, Opus has made a strong comeback boasting headline-making developments in the Twin Cities and throughout the Midwest while it’s also expanding into new markets.
Former Opus executive Tim Murnane took over the company in 2010 and led a corporate restructuring. Since emerging in mid-2010, Opus has executed more than $1 billion in signed contracts, including signed leases, third-party construction and development contracts, and building and land sale transactions across the country.
The company has eight regional offices, including a brand-new new office in Phoenix, and has grown to approximately 350 employees.
“We’re seeing a very strong recovery in virtually every city that we’re active in,” says Dave Menke, president of Opus Development Co. “Everyone to some degree was impacted by the recession. But really since late 2009, we’ve seen a steady continued growth, and in particular, the last 18 months have been very robust. Looking forward into 2015 and 2016, we see a very solid and diverse development pipeline across our platform.”
Opus’ current showcase developments in the Twin Cities include The Nic on Fifth™-- a 253-unit, luxury high-rise apartment tower in downtown Minneapolis, which is opening in early September – and a 222,000-square-foot, nine-story headquarters building for Fortune 500 company Xcel Energy. Opus broke ground on the building – at the north end of Nicollet Mall -- this summer. The facility will be delivered in 2016.
How has Opus rebounded?
Menke says Opus’ development focus over the last several years has centered on industrial, residential and office build-to-suit projects, like the one for Xcel Energy.
One diversification strategy following the recession was to leverage its residential expertise into the student-housing sector.
“We were opportunistic and nimble enough to see what we felt was a space in student housing that was under-served in particular here at the University of Minnesota in our backyard,” Menke says. “We used that as our springboard to execute subsequent (student-housing) developments here in the Twin Cities, but also took that success and same template to a number of other universities across our platform.”
In Minneapolis, Opus is developing its third Twin Cities student project called Venue at Dinkytown, a 140-unit, 247-bed development blocks away from the University of Minnesota campus. Construction began in August 2013 with completion this August.
“It’s being well received,” Menke says. “We open its doors in three weeks and we’re close to 90 percent preleased. That market has proven to be very, very robust. “
In addition, Opus has student-housing projects opening in August at Marquette University and the University of Wisconsin – Madison. It has three more student-housing projects slated for delivery in 2015 -- at Iowa State, University of Michigan and University of Missouri.
“That’s eight student-housing projects either delivered or delivering over the next 12 months,” Menke says. “We see this sector as a significant contributor to our development pipeline.”
Market-rate apartments are hot
Opus has also been busy developing luxury, multifamily market-rate rental projects and taking advantage of record-low apartment vacancy rates.
“It’s obviously the low-hanging development fruit,” Menke says.
The upscale The Nic on Fifth™ will open its doors in early September.
“We’ve executed very successfully on this high rise – really the very first of its kind in the Twin Cities for decades – on property we have owned in the downtown core of Minneapolis,” he says. “The Nic is truly setting a new bar as far as finishes, quality and amenities. It’s skyway-connected and has a light rail station at its front door. It has retail on the first and second floors, so it’s a very unique project and sets the standard for luxury urban living.”
Also recently completed is VÉLO, a boutique, six-story luxury apartment complex in Minneapolis’ North Loop neighborhood.
“We purposely designed and branded this project around walkability, bike-friendly, pet-friendly sustainable kind of living,” Menke says. “We just opened the doors to its very first renters last week.”
Opus also has plans to redevelop the former Seven Corners Hardware site, one block from Xcel Energy Center in downtown St. Paul, into upscale apartments.
“We have a very exciting project in St. Paul – not yet named – on West Seventh Street and basically adjacent to the Xcel arena,” Menke says. “We will redevelop this site later this year and it will be a mix of luxury rental apartments, retail and an adjacent hotel. It’s a project in a market that’s on the cusp of exploding. St. Paul is seeing its own renaissance and resurgence and people wanting to live downtown.”
Meanwhile, Opus is also tackling other luxury apartment developments in markets like Chicago and Denver.
Spec industrial is back
Menke says Opus currently has 2.5 million square feet of speculative industrial development underway in several markets including the Twin Cities, Indianapolis, Chicago and Columbus, Ohio. Locally, Opus recently finished up a 200,000-square-foot spec building at the Valley Park Business Center in Shakopee—a hotbed for industrial development. The developer plans to build another 500,000 square feet of space in the park in phases.
“And in the Twin Cities Northwest submarket, we have some early efforts underway for additional speculative industrial development,” Menke says.
Office build-to-suits are strong; handful of markets seeing spec
“But for the build-to-suits – the Xcel Energy-type projects - which we’ve had very good success in winning and executing -- the speculative development for office is really limited to just a few markets,” Menke says. “We’re seeing the kind of demand and metrics that support speculative office in Phoenix, and we’re taking steps toward advancing some spec office development there. The same is true in Denver. It’s just now beginning to show signs that support speculative office development especially in the south submarket.”
He says the Twin Cities, however, has not had the job growth and resulting demand needed to support speculative development. “There’s just so much supply and continued ‘right-sizing’ and consolidation,” Menke says.
Retail is user-driven
Menke says retail development is somewhat user-driven and very specific to location. Opus has one major retail project planned in the Twin Cities on nearly 40 acres in Maple Grove.
“We have a project in Maple Grove that is a continuation of our success in that marketplace with the Arbor Lakes development,” he says. He says it will be a grocery-anchored retail project that will start later this year and include retail and restaurants along with a hotel. It will be developed adjacent to the last phase of retail Opus completed there, called the Fountains at Arbor Lakes.
Future looks bright for Opus
Menke says Opus will continue to add to its team and is rounding out its development and construction staff. “We’re growing geographically as evidenced by our new operation in Phoenix,” he says. “We’re in a really good spot with our pipeline in 2015, 2016 and beyond. We have a nice, well-rounded book of business across a broad geography. I’m very pleased with what we’ve been able to accomplish and excited about the seeds that we’ve planted for our future growth.”
Posted at: 9:29 am on July 30th, 2014