Once skeptical, Oppidan joins rush to North Dakota

Friday, June 29, 2012

Finance and Commerce

Once skeptical, Oppidan joins rush to North Dakota

Posted: 7:30 am Fri, June 29, 2012
By Burl Gilyard
Tags: CBL & Associates Properties Inc., Joe Ryan, Oppidan Investment Co.

Minnetonka-based developer Oppidan Investment Co. is hoping to mine gold in the booming oil fields of North Dakota.

Oppidan plans to invest more than $100 million to develop retail and apartment projects in the Bakken oil field region of western North Dakota.

Joe Ryan, who founded Oppidan in 1991, said that he was initially skeptical of pursuing development in North Dakota. But today Ryan is a believer in the long-term growth prospects of the region.

“There’s a lot to be done up there,” Ryan said.

Oppidan has plans for retail projects in five North Dakota cities:

  • 250,000 square feet in Dickinson
  • 180,000 square feet in Minot
  • 80,000 square feet in Stanley
  • 30,000 square feet in Tioga
  • 118,000 square feet in Watford City

The Watford City project is to start construction in July, and several others will start this fall.

Oppidan has long-term relationships with many of tenants slated for the project. St. Cloud-based Coborn’s Inc. will have grocery stores in the Stanley, Tioga and Watford City projects. Omaha, Neb.-based Gordmans Stores Inc., a department store operator, will have a store in the Minot project. Holiday Station Stores will be in most of the projects.

“They did their homework and found out that western North Dakota is the real deal,” said Jay Moore, a property developer with Oppidan, of tenant interest in the area.

Historically, the North Dakota real estate market has not drawn much outside interest. But last month, the Chattanooga, Tenn.-based CBL & Associates Properties Inc., a publicly traded real estate investment trust (REIT), paid $91.5 million for the Dakota Square Mall in Minot.

Ryan was thrilled to see that deal, noting that Oppidan’s site in Minot is “just a bit south” of the Dakota Square Mall.

“That just tells you that there’s a national play here. Groups like CBL understand that, so they’re making an investment into the marketplace,” Ryan said. “That’s a big deal.”

CBL’s announcement of the Dakota Square Mall deal noted the “significant growth” in the Minot area, the area’s low unemployment rate and its proximity to the Bakken Shale Formation.

“Their bet is that North Dakota in general, and Minot specifically, has a very bright and long-term future,” said Terry Kingston, a veteran investment sales broker. “To me it’s an endorsement that they believe that this is not a short-term boom.”

Oppidan Investment Co. is planning a 30,000-square-foot retail project in Tioga, N.D., where new housing has been built for oil workers. (Bloomberg News)

Kingston, an executive director with capital markets group of Bloomington-based Cushman & Wakefield/NorthMarq, was involved in brokering the $58 million sale of the Kirkwood Mall in Bismarck, N.D., in 2011.

“All the real entrepreneurial guys are up there,” Kingston said. “At some point the game will be won and lost based on timing. How long can this go on? It’s a high-risk, high-return business out there.”

Garett Smith, a broker with the Fargo-based Property Resources Group, focuses on industrial properties in the Dickinson area.

“I’m seeing a very short supply and very high demand. There are so many phone calls coming in,” Smith said. “The growth rate out there is staggering.”

Moore said that the growth is also driving a need for retail services in North Dakota, where residents are used to having to drive long distances to stores.

“These towns are expanding at such a rapid rate,” Moore said.

Over the years, Oppidan has done national work for a range of retailers including Cub Foods, Camping World, Coborn’s, Econofoods, Goodwill, Orchard Supply and Gander Mountain. The company has developed more than 80 percent of Gander Mountain’s retail stores across the nation.

Ryan said that securing financing for the North Dakota projects hasn’t been an issue for Oppidan because the company typically puts together deals that are fully leased.

“We haven’t had to address that question because everything that we’ve started has been fully leased and therefore becomes very financeable,” Ryan said.

While Oppidan is best known for its retail work, the company is also building a 36-unit apartment building in Williston and planning a second phase. Ryan said it marks the company’s first apartment development.

Oppidan is looking for more deals in North Dakota, he said.

“We will continue to pursue that market aggressively,” Ryan said. “This growth is here, it’s here to stay and its significant growth.”

 

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