A Swiss developer is planning to build a $500 million real estate project in Williston, North Dakota, where a surging energy industry is leading to a population boom and rising property demand.
The two principals of developer Stropiq Inc. are at the International Council of Shopping Centers conference in Las Vegas this week trying to lure retailers to the 219-acre (89-hectare) Williston Crossing project, scheduled to break ground in March. The 1 million-square-foot (93,000-square-meter) project will include retail, entertainment, hotel, office and multifamily buildings.
Stropiq and investors such as KKR & Co. are rushing to accommodate a ballooning population of energy workers in Williston, located in the oil-rich Bakken shale formation. The average rent for a small apartment in the western North Dakota town is higher than in New York or San Francisco, according to Apartment Guide. Along with housing, retail offerings in the city are in short supply, Stropiq executives said.
“If you want anything that doesn’t exist in a grocery store or Wal-Mart, you have to drive two hours,” said Terry Olin, a Stropiq principal and graduate of North Dakota State University in Fargo. “We’d like to change that as fast as we can.”
The developers have hired real estate brokerage Jones Lang LaSalle Inc. to market the retail part of Williston Crossing and handle pre-leasing of the project, about 625 miles (1,000 kilometers) from Minneapolis.
“This is meant to be a retail hub for the market,” said Larry Jensen, a Jones Lang LaSalle executive vice president.
Stropiq already has a 93-unit apartment complex under development in Williston, with the first building scheduled to open in July, said Ellen Simone Weyrauch, a company principal.
Weyrauch, who is based in Zurich, was previously a managing director at Eastern Property Holdings Ltd. Olin, who is from Minnesota and now based in Geneva, was on the management committee of Eastern Property. He left the Russia-focused real estate investment company in 2013.
The oil boom has helped send North Dakota’s unemployment rate to 2.6 percent in April, the lowest in the U.S., according to the Labor Department. That compares with a national jobless rate of 6.3 percent.
Williston’s population has grown 42 percent since 2000, according to a report outlining a downtown plan for the city. Population estimates range from 25,000 to 35,000, which includes temporary residents. About 18,000 are permanent residents.
Williston was the fastest-growing “micropolitan statistical area” in the U.S. in the 12 months ended July 2013, with the population rising 10.7 percent, according to the Census Bureau. A micropolitan area is a region that has an urban area of between 10,000 and 49,999 people.
Demand for apartments and other housing has climbed along with the population. Home prices in North Dakota, the fastest-growing U.S. state, hit a record in the fourth quarter, climbing 11 percent from a year earlier, according to the Federal Housing Finance Agency.
In Williston, a 700-square-foot, one-bedroom, one-bath apartment can cost more than $2,000 a month, according to Apartment Guide, which said the city has the highest rents for small apartments on average in the U.S. A posting on Craigslist advertises a one-bedroom apartment including utilities for $2,150 a month.
The booming economy has also lured other real estate investors, including KKR, developer of a housing development in Williston. Minot, North Dakota-based Investors Real Estate Trust is building two apartment projects in Williston, the 44-unit Dakota Commons and the 288-unit Renaissance Heights, both scheduled to open next year.
North Dakota’s economy grew 13 percent in 2012, the fastest rate in the U.S. Petroleum-industry employment totaled 40,856 in 2011, up from 5,051 in 2005, a year before the oilfield expansion began with techniques such as hydraulic fracturing, also known as fracking.
The combination of horizontal drilling and fracking has unlocked supplies from shale formations in the central U.S., including the Bakken, which holds the nation’s second-largest oil supply. The nation’s crude production climbed to a 28-year high earlier this month, data from the Energy Information Administration show.