Demise of Roseville-based Rottlund Homes a Sign of The Times

When you click on the web site for Roseville-based Rottlund Homes, you're greeted with a woman singing, "Rottlund Homes. Your builder for life."

Well, this week, Rottlund Homes has all but died.

Officials at Rottlund, one of the Twin Cities largest and longest running home builders, said Friday their company is going to cease business after it wraps up construction on 20 remaining homes by the end of December and sorts out the last of its finances during the first quarter of 2012. 

Buffeted by the housing construction slump during the past five years and now a bank syndicate unwilling to continue lending for the company to build more homes, Rottlund Homes is calling it quits. Its demise comes after being in business since 1973 and once ranked as the Twin Cities second-largest home builder.

As a veteran business journalist, I never imagined Rottlund could go out of business. It had weathered other dips in the ecoomy, right? It was too big to fail, yes?

In Twin Cities' housing circles, the passing of Rottlund is like a major retailer passing from the scene or a prominent manufacturer having to shutter its doors. 

But company Chief Financial Officer Steve Kahn said Rottlund's imminent exit was the result of the housing market. "It has been in the doldrums for the five years," he said. 

The proof is in the numbers: In 2010, Rottlund posted sales of about $38 million, greatly depressed from the $350 million that it reaped during housing's boom years.

Around the country, there have been scores of home builders that have gone out of business, Kahn said.

Added Mike Swanson, Rottlund vice president and corporate construction risk manager, "It is the death of an industry."

Swanson, a 21-year employee of Rottlund, said his company's exit will mean more market share opportunities for bigger national players in the Twin Cities region with fewer local independents surviving.

Dave Siegel, executive director of the Builders Association of the Twin Cities, said his industry has gone through a depression. In 2007, the Twin Cities metro region added 19,000 new housing units; last year that number was only 4,000, he said.

"It (Rottlund closing) is a sad day and chilling for the industry when you see such a long-standing builder like this succumb to the economy," Siegel said. "It's prettiy significant."

Rottlund gained its reputation as builder of single-family homes and in more recent years also took on construction of multi-family houing, including townhouses. Over the years, some of Rottlund's more notable developments included the Upper Landing in St. Paul and Dancing Waters in Woodbury.

Aside from the housing slump, many builders have also had to contend with falling land prices. If they bought property at the wrong time, that land could be figuratively under water.
"There is no room for error in this kind of ecoomy." Siegel said. As a result, a few other big builders-by Twin Cities standard-have bitten the dust, he said. Those include M.W. Johnson Construction, he said.

Meanwhile, in closing, Rottlund has vowed to pay all its subcontractors and plans to finish building some 20 homes. Building sites include properties in Hugo, Blaine, Bayport and Maple Grove, Kahn said.

Kahn said that Rottlund was unsuccesful in finding other financing and fell short of a bid to sell the company. "Nothing came of that," he said.