Nate Helbach is a fresh face in Madison’s development scene with big ideas

It’s early on a sunny June morning at the corner of East Washington Avenue and South Paterson Street, where the sound of cement mixers and other construction equipment is competing with a country band running through a soundcheck at Breese Stevens Field.

Nate Helbach is standing among rebar and lumber on the second floor of the hollowed out Gardner Bakery building, part of the ambitious Bakers Place residential development, which secured over $73 million in financing a year ago, delivering a quick lesson in urban real estate economics.

“Do you know the metric real estate investors are looking at?”

This reporter did not.

“Take your total NOI — net operating income — divided by your total cost. That equals some sort of percentage and typically you want like 6%. At least they did before people started raising rates, just because the same investor could go buy a government bond for 4.5 or 5%, right? So if you are going to invest 100% cash in this deal, what would my return, annually, be?” Helbach says, checking to make sure he hasn’t lost me. “They need some sort of risk premium. And so usually it’s about 150 to 200 basis points above the yield on the bond level.”

We’re 10 minutes into a hardhat tour of the construction site and Helbach, 25, has arrived at the crux of the challenge facing all real estate developers and investors, but especially those who want to make a city’s “built environment” more sustainable and environmentally responsible. How can a builder realize a vision while still turning a profit?

“That was probably the most difficult aspect of this project,” he says. “The dichotomy was between having those sustainable features — like mass timber, LEED certification, green roofs, energy-efficient windows and walls — and then also being able to hit that financial metric that our investors need to fund the project.”

Helbach’s vision for Bakers Place and his real estate development company, The Neutral Project, is based on a paper he wrote while studying finance through Harvard Extension School. His thesis: by using mass timber and other low-carbon construction materials, developers can significantly reduce the environmental harm created throughout the construction process (embodied carbon) and maintenance (operational carbon) of residential buildings.

To measure the effectiveness of this approach, Helbach says the firm makes use of life cycle analysis to measure the embodied carbon impact of its buildings and energy modeling tools to forecast their operational impact.

“With Bakers Place, our goal was zero, or neutral. That’s why we’re called The Neutral Project,” Helbach says. “We weren’t able to get there because of the need to balance that dichotomy of what we can do on the sustainable front versus what we can do on the fiscal front.

“This is kind of our beta test and our case study, and the goal from here is to iterate all the way to zero and we’ll see how many projects that takes.”

In pursuing that vision, Helbach has looked outside conventional thinking for development practices, financing models and building materials, especially when it comes to using mass timber. He’s looking to innovate in other areas of real estate with ideas about addressing the city’s “missing middle” housing challenges and bringing smaller and younger investors into the business.

And he’s upfront about how his Christian faith informs his business approach while challenging perceptions and stereotypes of his profession and generation.

“It’s one thing to go out and make money, which is great. Businesses should be profitable. That means they’re working,” he says. “But really, from my perspective, if we can’t solve real problems that we have in society, then why are we in business? I don’t think business is just a mode of being to make money and become very wealthy. It’s also a mode of being to help people and solve these larger existential problems that we have in the U.S. and in the world.”

The world as a classroom

Helbach grew up in the Middleton area with two brothers (Joshua, 27, and Noah, 24) and a sister (Esther, 18). Homeschooling and global travel influenced their early education and upbringing.

“The boys were very, very active and we soon realized that while the classroom is great for learning reading, writing and arithmetic, you can only truly understand God’s world by traveling in it,” Nate’s mother, Melissa Helbach, says. “And so we just made the world their classroom.”

She says the family traveled to over 50 countries in Asia, South America, Europe and Africa, often integrating their trips with curriculum, like exploring the history of the Roman Empire by traveling from Istanbul to northern Africa.

“We would always follow the scope and sequence of each grade,” she says. “Like, what does a fourth grader need to know? And we would kind of mimic that and put that into our own world academy.”

Planning the trips was part of the kids’ coursework.

“On one trip, we explored northern Europe, visiting like seven different spots. So we were required to research each spot, come up with an overview,” Noah says. “And then my dad would give us a history lesson on that. We had to take a journal and do that. And so even though we were on, quote unquote, vacation, we were still in school. And we were still learning and writing and reading.”

I first met Nathan and Noah about 10 years ago, when they played on a recreational youth basketball team I coached. They came to me one day after a game to let me know they were headed to Honduras to work at an orphanage and would miss several weeks. Their dad, Casey Helbach, served on the orphanage’s board.

“It’s called Give Hope 2 Kids and it’s an orphanage that takes in kids from all over Honduras,” Melissa Helbach says. “We went up there and lived with the people that started it and rolled up our sleeves and every day we’d wake up with the rooster crowing and milk the cows or slaughter the sheep down by the river — because that’s how they got their meat — or went out into the gardens and picked the vegetables. It was just a very agrarian society that we submerged them in and we absolutely loved it. It was helpful for the kids to get a perspective on American materialism.”

When Nate and Noah hit high school age, Noah moved up so they could enroll in the same class at Middleton High School, primarily to play football, says Melissa. They would return to home school in the spring semesters, when the family took their lengthy trips. And Melissa says the boys were urged to pursue their interests.

“We said, ‘Okay, you have to do something else besides just traveling.’ So Nathan actually took it upon himself when he was a [high school] junior to get his real estate license and did an apprenticeship with a realtor,” she says.

He learned that field wasn’t for him before taking a similar path with insurance, which also didn’t stick. “Then he got introduced to the whole world of development,” Melissa says, “and that is where he found his niche.”

While Nate and Noah were in high school, the Helbach family made news in 2016 when a weekly bible study event organized by Melissa in a park adjacent to the high school attracted protests. “Jesus Lunch” drew hundreds of students for free pizza and discussion; the Freedom From Religion Foundation, along with some parents and students, objected to what they saw as proselytizing.

“We believe in freedom of speech,” Melissa Helbach says. “And that’s really what the Jesus Lunch controversy came down to was freedom of speech. It was a great illustration of how our founding fathers put freedom and speech in place in our Constitution, so we talked a lot about that with the kids at that time.”

Noah, who works in a Tesla collision center in the Chicago area, believes he and his brothers learned another lesson useful in the world of business.

“Sometimes, going against the establishment and standing up for what you think is right is needed,” he says. “It’s what’s necessary.” 

Familiar with controversy

Jesus Lunch wasn’t the only time the Helbach family was involved in controversy. In 2016, they opened a coffee shop on Madison’s west side, eventually adding a second location in Middleton. Nate refers to the shop as a homeschool project, where he and his two brothers learned different aspects of running a business with their parents’ support.

“We had taught the boys all these different ideas and principles about capitalism, so we thought let’s put it into practice,” Melissa says. “And we had traveled the world and seen all these different coffee houses. We love coffee. We saw that there was a need on the west side of Madison for a quaint little cute coffee house where everything was artisanal.”

During the summer of 2020 and the height of the COVID-19 pandemic, Casey Helbach posted a sign on the door of the Middleton shop that declared it a “mask-free zone,” defying Dane County’s mask mandate. The county public health department subsequently issued several citations and threatened to revoke the cafe’s food and drink license. Helbachs Coffee Roasters shut down in August 2020.

While Nate says he wasn’t directly involved in running the coffee shop by 2020, he recalls “hearing the arguments about it at family dinners.”

At the same time, Nate was taking courses through Harvard Extension School and working for Terrence Wall, a Middleton-based developer. He dropped out of the Harvard Extension School in 2020 and left his job to start The Neutral Project. In March 2021 Wall filed a lawsuit in Dane County Court claiming that Helbach broke a non-compete agreement by soliciting the firm’s investors. Following court-ordered mediation, the parties settled the suit later that year.

Helbach says his time working for Wall was a “pivotal element” in his early real estate career while Wall says that Helbach did not “have anything to do with development for us.”

Helbach’s age and relative inexperience in the industry do raise a few eyebrows from close watchers of Madison development, but he has managed to attract some credentialed partners and staff at The Neutral Project.

Among them is Daniel Glaessl, a California-based architect who is a partner and the firm’s chief product officer. He lists his work with international architecture firm Foster + Partners on the Apple campus in northern California and the Comcast Technology Center, Philadelphia’s tallest building at 60 stories.

“I’m somewhat agnostic to age,” says Glaessl, who was born in Germany. “I’m not agnostic to performance and to passion. I don’t really care how old Nate is, to be honest. We have a great team and we actually treat everybody the same. It’s independent of age. It’s dependent on performance.”

Glaessl also speaks to The Neutral Project’s capitalization and investment strategies. While more established firms bring with them a major investor along with a track record of executing deals and projects to ensure a return on investment and establish trust with policy makers, Helbach and his firm are just now working to establish those bona fides.

“We do a lot of bootstrapping,” Glaessl says, drawing a distinction between the firm’s lean operations and what he has seen living and working in Silicon Valley. The firm spent $30,000 to develop the idea for a low-rise building, a number he calls “very, very low. It’s our time and our blood, right? But that’s it. Some things work, some things don’t. If you lose, you lose small. If you win, you win big, hopefully.”

Wood is good

At 14 floors with 206 apartments — studios up to three-bedroom units — Bakers Place will be similar in size to the Galaxie and Constellation apartment buildings located across East Washington Avenue. The original bakery building on the corner will be home to a market and other retail, a tenants-only “speakeasy” entertainment space and what Helbach calls “lofty units” with exposed brick and trusses.

A pedestrian alley or “mews” will separate the redeveloped bakery from the apartment tower and provide access to a restaurant, the market and other retail shops.

Helbach hopes those features will help justify the Class A market rate rents, which he says will be on par with buildings like Ovation 309 on West Johnson Street, Domain at 420 W. Dayton St. and the new Adria at 179 W. Wilson St. He plans to offer virtual tours and release rent levels by June.

But luxury amenities aren’t what make Bakers Place noteworthy. When it’s complete, it will be the largest development in Dane County to make use of mass timber technology. That term was invented by Canadian architect Michael Green, whose firm designed Bakers Place.

“Mass Timber is defined as solid panels of wood engineered for strength through laminations of different layers,” Green writes in his book, The Case for Tall Wood Buildings. “The panels vary in size but can range upwards of 64 by 8 feet and in the case of cross-laminated timber, can be of any thickness from a few inches to 16 inches or more. Ultimately these are very large, very dense solid panels of wood.”

Manufacturing steel, concrete and masonry, the three major materials used in buildings around the world, is very carbon intensive. Meanwhile wood stores or sequesters carbon. In a January podcast he recorded with Helbach, Green takes his case a step further by pointing to the health benefits of spending time in a mass timber building his firm designed on the Google campus in Sunnyvale, California.

“If humans are actually surrounded by natural materials — we knew this already — you heal quicker, you learn faster, you work more productively,” Green says. “And [Google] actually looked at it from the point of view of sick days. You have less sick days when you’re surrounded by these materials, because you are healthier.”

Mass timber is increasingly prevalent in Europe and Canada, while Wisconsin is emerging as a center of activity in the U.S. The tallest mass timber building in the world, at 25 stories, is the Ascent in Milwaukee. That’s located about a half-mile from the Edison, a 32-story Neutral Project mass timber development set to break ground on a site on the Milwaukee River’s east bank this spring. And the firm is preparing to present plans for a 50-story-plus mass timber building on public land near the Marcus Performing Arts Center in Milwaukee.

Though he grumbles a bit about the reluctance of some city agencies to embrace wood as a structural material in a tall building, and he thinks there are changes Madison can make to its approval process, he is quick to praise city staff.

“A lot of developers crap on these staffers and it’s not very cool. But when we started this new company, my view was let’s see what the city can do,” he says. “There are genuinely good people at the city and they find themselves in this behemoth of a process. It almost makes them not able to do their jobs.”

The firm is working with several partners on a case study funded by an innovation grant from the USDA Forest Products Laboratory to address city agency concerns about how mass timber sequesters carbon and reacts to fire. Helbach says the findings will be released this month.

Another concern with using mass timber on the scale The Neutral Project plans is deforestation. Green admits that’s an important question, but points out that most deforestation is the result of agriculture uses; farms replacing old-growth forests. Mass timber ideally makes use of sustainable forestry or softwood, not old-growth hardwood.

“It’s a product that allows us to use small trees to make big panels,” Green says, while making it clear that climate will have an impact on the industry’s ability to produce the material. “As forest fires due to climate change continue to strain us, it’s going to put more pressure on the forest. And that’s why we have to start thinking about what’s next.”

Parking is another aspect of Bakers Place that diverges from the norm in Madison. Only 60% of the units will come with a parking space, a number once thought unimaginable in a residential building. Helbach points to the city’s nearby Livingston Street garage, with which his company has a 20-year lease, and the bus rapid transit station at the East Washington/Paterson intersection. The building is located in the Capitol East district, walkable to the isthmus and near-east side.

And then there are the Teslas.

“We’re starting with three shared Teslas. And then we’ll maybe expand that if there’s a demand,” Helbach says. “There will be an app for residents that allows you to check out a e-bike, an e-scooter or a Tesla.”

All of this, along with the building features designed to limit carbon emissions and energy usage, speak to Helbach’s environmentalism. He’s pretty clear about where those values come from.

“I think that God has called us to be stewards of this Earth,” he says. “And I think there’s a lot of things that we’ve done to harm the Earth over the past decades. And there needs to be people out there saying, ‘Hey, we need to change course here.’ Otherwise it’s going to become quite destructive, if it has not already become quite destructive.”

‘A very smart developer’

Downtown Madison Inc. president Jason Ilstrup closely watches Madison’s development scene, meets with the players, and works to build coalitions to support dense projects that will bring more residents downtown. He has high praise for Helbach.

“Nate is a very smart developer, someone who is trying new, innovative methods to help solve Madison’s current housing crisis,” he says.

Ilstrup calls attention to a Neutral Project proposal still in the planning stages: a 15-unit building at 519 W. Main St. The project would replace a four-unit house on a lot that’s smaller than one-fifth of an acre. Helbach hopes the size of the building and how it’s planned and constructed will help address the city’s “missing middle” problem.

“If you are below 120% of the area median income, you qualify for affordable housing. And if you’re above 180% of the area median income, you can usually afford a house,” Helbach says. “But if you’re in the middle, there’s not really any government subsidies that can pay for your housing and there’s really no housing that you can buy that would fit your budget. So what we’re trying to do is have an apartment that feels a little bit more like a house.”

The firm refers to this low-rise product as “Vanilla,” part of its “Urban Creamery” concept. Bakers Place is mid-rise, or “Cookies and Cream,” and the Edison in Milwaukee is high-rise, or “Chocolate.” The Neutral Project is planning to present the Vanilla idea at the Blueprint real estate conference in Las Vegas in September to attract investors who can help them build a lot of these types of projects to realize cost savings at scale.

“We are trying to utilize technology as much as we can by building very detailed digital models in-house,” Glaessl says. “And we get some of the components prefabricated, like bathroom pods or some of the wall elements, so we can assemble them very quickly. We have a high level of cost certainty and we can control our sustainability targets. These small projects have the same sustainability targets as anything else we do.

“We feel that it’s only feasible if we get really good at it.” 

Glaessl says the firm has identified “thousands” of Madison properties that are suitable for Vanilla buildings and they are looking to bring it to other communities, like Bentonville, Arkansas, home of the new Walmart headquarters and the “mountain biking capital of the world.”

“All of these other developers are going after one- and two-acre parcels to build larger buildings,” Helbach says. “So there’s not a lot of competition for these smaller parcels.”

The Neutral Project is also working out alternative financing for these projects while offering an opportunity for people to invest in real estate at a smaller price point. They’re creating a platform that allows investors to fund specific projects based on their interests or geographic location and buy and sell to other investors in their “secondary market.” Helbach says the funds would not be as liquid as stock, but would allow for more specific direction from investors than other crowdfunding platforms.

“Real estate is, right now, a very prestigious investment for only the very, very wealthy and institutional funds and…it shouldn’t be,” he says. “It should be just another asset in someone’s diversified portfolio.

“Our really big vision with The Neutral Project, and kind of our motto, is democratized real estate.”