Janice Carpi is National Underwriting Counsel at GRS Group
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In September, I blogged about the hotel industry’s recovery from the recession. In my blog, I discussed how the hotel boom is not only in the expected locations, such as New York and Las Vegas, but the boom has also hit in states that are often overlooked by hotel developers; states such as Oklahoma and North Dakota, where the demand is being pushed by the boom in the oil-shale business. In today’s Wall Street Journal, there is an article discussing how the oil fields are also creating boom towns on the North Dakota plains. These new towns are the focus of not only the hotel industry, but also for apartment and residential developers. The article describes how private-equity firm KKR & Co. is betting on the future of these boom-towns by investing in a multi-million dollar mixed use development in Williston, North Dakota.
According to the article, the KKR project, a joint venture with two partners, will develop over 800 apartments, over 700 new single-family homes, parks, sports fields, and other supporting facilities in Williston, a town in the northwestern corner of North Dakota. Williston is located near the center of the Bakken formation, an oil-rich area where winters are long and brutal, and much of the area is undeveloped.
The oil industry’s ability to generate whole boom towns is nothing new. You need only look back in history to the first oil fields in Pennsylvania, Texas, and Oklahoma to see how the jobs created by the industry bring not only workers, but their families to these areas. In the 1970’s we saw the same thing happen in Alaska. North Dakota recently passed Alaska as the nation’s 2nd leading oil producing state, following Texas.
According to the WSJ, Williston currently has a population of about 25,000, and an unemployment rate of under 1%, thanks to the oil-rich shale under the town. The new KKR development should provide housing for around 4,000 workers and their families. While old-time residents complain about the increased cost of housing due to the unsatisfied demand, the boom makes the town’s business owners see green, as in cash.
How long the boom will last is unknown, as well as whether how many of the workers who have moved there will stay when the oilfields play out. But for now, business is good in Williston, ND.
Here’s the link to the WSJ article: http://online.wsj.com/article/SB10001424127887324595904578117190099158474.html