Broader Focus helps Oppidan outlast the retail downturn

Friday, January 14, 2011

Broader focus helps Oppidan outlast retail’s downturn

Premium content from Minneapolis / St. Paul Business Journal by John Vomhof Jr., Staff writer

Date: Friday, January 14, 2011, 5:00am CST

When the recession hit, Oppidan Investment Co. President Joe Ryan decided to shift his company’s business model to keep business coming in the door. The company, he says, is positioned better than ever as the market starts to bounce back.

Ryan, who started Oppidan in 1991, rebranded the company as a real estate services provider, instead of just a merchant developer for retailers such as Gander Mountain. It began offering services like real estate brokerage, asset management, construction and project management and Leadership in Energy and Environmental Design (LEED) consulting on a piecemeal basis, and it started doing more business in areas outside of retail.

Revenue isn’t back to pre-recession levels, but 2010 was a “marked improvement” from 2009, largely thanks to the updated business model. (The privately held company doesn’t disclose its revenue.)

“The downturn wasn’t any fun. It was the most challenging time of our careers,” Ryan said. “But we’re smarter and more diverse now. We’re better coming out the other side.”

Development remained the 12-employee company’s core segment in 2010, accounting for roughly 70 percent of its business. That’s down from 90 to 95 percent before the recession.

Meanwhile, retail accounted for about 50 percent of business in 2010, down from approximately 95 percent before the recession as Oppidan ventured into industries including banking, medical, industrial, office and municipal. Those non-retail projects included the $26 million Vadnais Heights Sports Center and industrial plants in Louisiana and Missouri.

“There may be some different characteristics, but it’s just another box to us,” Ryan said. “The core fundamentals of a project are always the same.”

Vadnais Heights City Administrator Gerald Urban said he was impressed with Oppidan’s work on the sports center project. The quality of the final product exceeded initial expectations, while also coming in on time and on budget.

“I think most companies would have taken a year to build it, but they took just five months from start to opening,” Urban said.

The key to Oppidan’s success, Ryan said, is its strong reputation for getting projects done on time and under budget. It generates much of its new business from client referrals.

The company’s 2011 pipeline includes seven single-tenant developments for a national retailer, three grocery-anchored shopping centers, two large retail centers and two neighborhood retail centers. There’s also 12 restaurants, five sports centers, five industrial plants, five banks, two medical buildings and one master-planned development that includes residential and commercial.

“Our pipeline activity levels are the strongest they’ve ever been,” said Mike Ayres, Oppidan’s chief operating officer. “We’re just pinching ourselves about the people who are calling us, especially the past 90 or 120 days.”

One business area that has been a little slower to recover is property sales. Oppidan typically sells a property immediately upon completion of the project, but that became harder to do amid the recession.

Prior to the recession, the company had an average portfolio of about $100 million, mostly comprised of unfinished projects that were still under construction. But that portfolio ballooned to roughly $325 million by the start of 2010. It’s now down to about $225 million.

“Our portfolio will continue to shrink,” Ryan said. “We’re not changing our model on that.”


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