WILLISTON, ND— In recent years, thousands of oil workers have poured into the towns and cities that sit atop the nation’s shale formation areas like the Bakken in North Dakota and Eagle Ford in Texas, creating the need for new housing and retail outlets. And according to JLL’s new 2014 North American Energy Outlook study, even small cities like Williston, ND, which still have relatively little retail, have caught the eye of major brands like Whole Foods and Trader Joe’s. JLL expects that $80 billion in annual investments over the next six years will pour into the regions, turning small outposts into genuine boom towns.
“The energy boom is having a dramatic effect on the infrastructure of these boom towns and on the economies of the hubs that support the oil and gas business,” said Bruce Rutherford, international director and head of the oil & gas practice for JLL, in a prepared statement. GlobeSt.com will provide more detail from him later in the week.
“Sites like Williston and Midland, TX, Hobbs, NM in the Permian Basin are having a tremendous influx of workers, and those workers need to eat, they need places to shop and they need homes,” he added. “All of this demands infrastructure that doesn’t exist, and it needs to be built.”
As reported in GlobeSt.com, in Williston and the surrounding towns, those needs have kicked off the development of housing, restaurants and hotels. However, “we are just scratching the surface of the benefit on our local economies,” Rutherford said. “It also creates a business that has to be supported regionally which means jobs and a surge of economic activity in cities like Houston, Denver, Dallas and Pittsburgh.”
The average retail square-foot per person is only 12.05 in North Dakota, nearly 50% below the US average, JLL found. “Man camps are commonplace, due to low housing vacancy rates and rising home prices, which are expected to jump 9.69% by 2018.” Furthermore, apartment rents are now more than $2.50-per-square-foot.
Estimates are that the oil and gas supply will last for decades, and big developers have begun to launch North Dakota projects. The Swiss real estate company Stropiq, for example, “is planning a $500 million, 219-acre development, featuring one-million-square-feet of retail, entertainment and hotel space along with offices and residential plots,” according to JLL.
“The US Commerce Department recent announcement to open the door to more U.S. oil exports is an incredible economic opportunity,” Rutherford added. “Increase in crude production could lead to a nearly $73 billion rise in the US GDP in 2016. That means more jobs and economic growth in these communities.”