It remains to be seen whether areas like Williston are long-term opportunities or classic boomtowns, featuring an overwhelming buildup of demand that ends just as suddenly as it began, leaving a ghost town in its wake.
“Everyone here drinks the Kool-Aid,” says Clint Wilson, president of locally-based builder Tribeca Properties Development. “Everyone thinks even if it’s not a boom, it will be a growing, stable environment.
The politics surrounding fracking have been polarizing: while some communities are happily benefiting from the technology, others are staunchly against it due to environmental concerns.
But so long as the price of oil stays at more than 55 cents a barrel, the market will still be stable, even without fracking, Wilson adds.
Yet, there are so few barriers to entry, making communities along the shale line predisposed to overbuilding if developers aren’t cautious. In the past two years, land prices have doubled, or even moreso, in some areas of North Dakota. Parcels are going for $8 a square foot now, up from only $3 to $3.50 two years ago.
“You can keep waiting [once you buy land], but you might as well build it now, the demand is here today,” Wilson says.
What’s more surprising than land prices, however, are the exorbitant rent ranges in the Williston area.
“Rents are still in the $2,200-a-month range, which is high, but as we continue to bring supply into the market, those are going to come down,” adds Shawn Wenko, assistant director for the Williston Economic Development department. “We have the highest rents in the nation right now, and it really boils down to supply and demand.”
The rents are rivaling New York City and San Francisco, but Williston has already seen its peak in 2012. Now, competitiveness is starting to brew in the market as more communities emerge, and causing rents to eventually drop.
But the need for more housing is acute, and the lack of it is inhibiting Williston’s growth. Once larger firms establish a presence in the boomtown, the market will be more sustainable.
“When these large companies come in, if they’re going to do a project, they’re going to do 500 homes, or they’re going to do 1,000 apartment units,” Wenko says. “And that’s good for us, because that helps bring some large capacity on line fairly quickly. And that will help us get caught up with the demand we’re seeing here for housing.”
-Linsey Isaacs is an assistant editor with Multifamily Executive magazine. Follow her on twitter @LinseyI to continue this conversation.