Childhood friends behind rapidly growing real estate business

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June 26, 2013
By: Michelle Bruch
CPM co-founders Nick Walton (left) and Dan Oberpriller.
Photo by Michelle Bruch
Michelle Bruch
CPM Development expanding its presence in Uptown, University of Minnesota area

 

When Nick Walton walks into Dunn Bros, he is often surrounded by old customers and potential clients.

“I’ve built three houses on the block I live on,” said Walton, who is co-founder of CPM Development and lives in Linden Hills. “If you’re going to build for people that live 12 feet away from you, you’d better do a really good job and stand behind your work.”

Walton and CPM co-founder Dan Oberpriller, also a Linden Hills resident, are increasingly familiar faces in Southwest Minneapolis. Most of their work is concentrated in the city limits, and more of it is cropping up in Uptown. CPM offices out of the 1800Lake apartments it developed at Lake & Knox, and all 57 apartments were leased within four months of opening. Reuter Walton Construction, where Walton is an owner, is building The Walkway developed by Clark Gassen at 1312 W. Lake St. And CPM is currently pitching a new four-story condo and commercial project at the northeastcorner of Lake & James, where Calhoun Bike Rental is today.

The developers dipped into savings to buy their first rental house near the University of Minnesota.

“It was Dan doing leasing in the evenings and me fixing toilets on Saturday, and it worked,” Walton said. “In my basement, we created CPM. ... Over the last eight years, it’s grown from managing a few of our own houses to about 600 units right now.”

Homegrown developers

Walton and Oberpriller grew up together in the city: Oberpriller near Pearl Park, Walton in Lynnhurst. They met in seventh grade, attending Anthony Middle School and Washburn High School together. They learned to water ski barefoot at the age of 15, a hobby they continue today.

Walton went to the University of Colorado-Boulder; Oberpriller went to the University of Utah. Oberpriller worked in sales at TigerTelecom and later Oracle. Walton initially worked as a carpenter in Boulder, until he was hired to work at Reuter Construction in 2003 building single-family homes.

The co-founders said they leveraged good credit and good day jobs to get their start in development. Today, they said  they’re leveraging good partnerships and banking relationships to complete larger projects.

“[Banks] believed in what our overall strategy was, how we ran our businesses, and how tight they are. We don’t have any vacancy, we’re watching our assets, we’re taking good care of the properties, and we reinvest the money [in our properties],” Oberpriller said. “When banks see that and see your work ethic is you’re working really hard and have a full-time job and build this on the side, those two foster a faster progression forward.”

The company didn’t lay off any of its employees during the downturn, and CPM isn’t much for turnover in general.

“We’ve never had an employee leave the company,” Walton said.

Most of CPM’s properties are concentrated near the University of Minnesota. CPM is also planning a 98-unit, six-story building at 700 Washington Ave. SE, and it’s proposing a six-story, 202-unit project at 15th Avenue and 7th Street Southeast. The Elysian, a 56-unit apartment project at 401 8th Ave. SE, is slated to open in the fall.

CPM makes the case for height

Walton and Oberpriller said CPM is distinctive for its investment in design. On the Lake & James project, they’re hiring Peterssen/Keller Architecture. (Architect Lars Peterssen lives a block from the new development).

“We do spend more money than some of our competitors on the additional design and the additional materials that go with it,” Walton said. “These buildings are going to be here for a long time.”

To help pay for design, however, Walton said certain projects should stand higher. CPM’s Uptown sites between Lake and Lagoon are appropriate spots for taller heights, he said.

“The additional density allows for a project to have better design and better materials,” he said. “Otherwise if the land price is fixed, people save the money in the building, which is a horrible spot to save. Then you end up with an inferior building.”

Height is a sticking point for some Uptown-area neighborhoods, however. The city’s Shoreland Overlay District would require the Lake & James site to stand at two-and-a-half stories or 35 feet, less than CPM’s preliminary four-story proposal.

At the East Isles Residents Association’s (EIRA) June meeting of the Zoning & Land Use Committee, members prepped for CPM’s Lake & James pitch by reviewing the Uptown small area plan. More than 400 people participated in the small area planning process, with every block scrutinized. The plan recommends the most intense development in the core of Uptown, with heights that transition down to residential neighborhoods and the lakes.

Meeting attendee MelissaAnderson-Rossini said the small area plan should take center stage for every new development proposal.

“This is your Koran or your Bible. Negotiate absolutely the toughest you can,” she said to the Zoning Committee. “Abide by what you know our collective wishes are.”

Oberpriller is helping to craft Marcy Holmes’ neighborhood master plan near the U. He is also involved  in the university’s neighborhood improvement association and a new special service district there. He said Uptown’s small area plan provides an “excellent framework” for the direction of Uptown.

“I think the reason that you’re seeing cranes in the sky here is because they had some organization and they have a small area plan,” he said. “A small area plan is an invitation for people that says we’re ready, we want to plan this right, come over and help us work on buildings.”

1800 Lake’s groundwater problem

The EIRA Zoning Committee recently discussed CPM’s 1800 Lake project, which city officials approved despite the applicable Shoreland zoning rules and despite the objections of area neighborhood groups. CPM discovered groundwater during construction, and obtained a permit to discharge the water into the storm sewer. The project is now pumping 100 million tons of groundwater annually into the lagoon between Lake of the Isles and Lake Calhoun, a source of major concern for some residents.

“If [the lakes] go, there goes Minneapolis,” said Lara Norkus-Crampton, a former Planning Commission member. “A lot is at stake here.”

The CPM founders said they’re working closely with the city and expect the solution will be costly.

“We did everything right. Early on, we hired the best consultants and one of the best architects. We ended up finding more water on the site than anybody anticipated,” Walton said. “We’re doing everything above board, and we’re working close to find a solution with the city.”

The developers said the cost of remedying 1800 Lake’s groundwater problem is unrelated to its recent decision to back away from an apartment project at 3535 Grand Ave. S. Oberpriller has said the four-story project came in over-budget, but it could be resurrected in the future.

CPM’s development forecast

Looking ahead, Walton and Oberpriller think all of Uptown’s apartments under construction will be absorbed, with more to come. Uptown’s connection to the lakes and proximity to Downtown will continue to make it a destination, Oberpriller said.

“There’s no question, the density is going to rise here,” he said. “Apple Valley broke into two schools seven years ago. Those students are all getting done with college. As long as the city of Minneapolis is providing more jobs and opportunities and companies are growing, those people are going to move here to work.”

 Reach Michelle Bruch at mbruch@mnpubs.com.