Tim Murnane is no stranger to Minneapolis’ The Opus Group. He first started working at the company back in 1984. Last year, he rejoined the firm – after a brief absence – to help Opus rebound after tough times caused by the nation’s economic slump. Murnane, who now holds the title of president and chief executive officer at Opus, says that he sees a bright future for this once-troubled development company.
Minnesota Real Estate Journal: What brought you back to The Opus Group? Why did you return once again to the company? Tim Murnane: I was excited about helping to lead this company as it was changing its focus. I’ve long been a part of Opus. I first joined the company in 1984. I left in 1987 to work for another development company, but then, in 1991, I was asked to rejoin Opus to do the leasing of what is now the U.S. Bank Plaza in Minneapolis. I also was charged with starting Opus’ retail division. Up until 2009, I was working on a number of large projects with Opus. I worked on Arbor Lakes, a 450-acre mixed-use master-planned community in Maple Grove. I developed 2-and-a-half-million square feet of retail over the course of 10 years. That included power centers, new urbanism projects and downtown retail projects. I served as the head developer on the Best Buy headquarters in Richfield, Minn. I was involved in some high-profile projects, as were all my colleagues at Opus.
MREJ: You left Opus a second time in 2009, right? Murnane: I left Opus in June of 2009. The company since then has gone through some significant challenges. I was hired back as president and chief executive officer of Opus Holding in July of 2010. I’m excited about the changes that are taking place here.
MREJ: The problems that Opus has faced in recent years are well known. What is the company doing to change its fortunes? Murnane: As you know, Opus has gone through a number of changes and challenges the last couple of years. Going forward, though, we’ve gone to a new streamlined organization that we are marketing as the Opus Group. The company is now operating as an amalgamation of three companies. We have Opus Design Build, our construction company; Opus Development, our real estate development group; and Opus AE Group, our architectural group. I think that we are now back to what Opus had been in its best days: a design build developer with in-house capabilities. We’ve gone back to the basics.
MREJ: You’re obviously optimistic about the future of Opus. What are some of the reasons for your optimism? Murnane: The company has gone through some really tough times. But today we are a company that has been re-capitalized by the family that owns us. We also have bonding capacity now of more than $200 million. We can now go forward and get projects completed. A year-and-a-half ago, that was a challenge for us. Those pieces of the puzzle are now in place, and we are out actively chasing down new business.
MREJ: How are the three separate divisions of The Opus Group faring today? The economy is getting better, but it’s still so tough out there for commercial real estate companies. Murnane: I think we’re unique in the kind of leadership that we have here. We have individuals here who have worked together for more than 20 years. Tom Shaver, who leads Opus Development Corporation, had worked for me at Opus Northwest. Dave Bangasser, leads Opus Design Build, has been with Opus for more than 25 years in the construction group. I’ve worked closely with him on a number of projects at Opus. That’s a great situation. We both know how the other operates. We can quickly work as a team. Ed Gschneidner, president of Opus AE Group, is overseeing a group that has seen a significant reduction as the industry has gone through a recession. That Opus AE group is not nearly as big as it once was, but we still have a talented core group of about 30 architects. Ed has been here with us for more than 20 years. He’s touched virtually all of our projects. We have worked together closely. That synergy of having senior leadership members who are familiar with each other is so important as you’re rebuilding a company. As you come out of the storm, it’s important to have strong leadership in place. More importantly, it’s crucial to have leadership that has worked with each over the years.
MREJ: What changes has Opus made to its business model? Murnane: We are focusing on our core, on what Opus has been known for throughout the years. We had a reputation as a company that builds great buildings in industrial, office, retail and multi-family. The new projects that we are working on now are helping to restore that reputation. We are beginning work on Stadium Village Flats, a student-apartment project near the University of Minnesota. We are also working on a 300,000-square-foot build-to-suit distribution center in Des Moines, Iowa. That’s a great deal, a good deal for the local Des Moines economy. It’s great for Opus, too, because we have significant expertise in this type of development. Candidly, we were very aggressive to land this project. That is our goal and plan going forward: We are looking for relatively low-risk, not speculative, build-to-suit projects. We have the capability and capital to pursue those deals now. That’s what has our team very fired up and motivated.
MREJ: Any other reasons for optimism right now? Murnane: At the end of last year we acquired all of the Minnesota and South Dakota land holdings of Opus Northwest. That land is an orderly wind-down and liquidation. As part of that, we bid on the Minnesota and South Dakota land, 75 acres of property. We have all that land inventory now that we are actively pursuing deals with. While the market conditions are still challenging, we are seeing new deals getting done. Those land assets are assets that this time at Opus is familiar with. Acquiring this land was significant. It brings some sense of clarity with what is going on with Opus Group and Opus Northwest.
MREJ: In general, are you seeing signs that the economy is getting better, not just in Minnesota but across the country? Murnane: We are, especially in the manufacturing area. Some of those companies are sitting on cash, and are starting to make some moves. Depending on what part of the company that you are in, you’re seeing some good activity. As the economy starts to grow, businesses are starting to increase their productivity again. We are starting to see the benefits of that. Of course, you have to balance that optimism with the inventory that is still in place in many of the markets. There is a fairly high vacancy rate in industrial in some markets. Until that product burns off, you won’t see a robust bounce in construction in those markets. Office recovery will be a little slower. But again, we are poised and ready to respond to build-to-suit activity in the office arena, too. We are still working with a handful of retailers who are out doing store expansions, too. We are staying close to these folks, too.