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 Prices, which only last year rivaled levels in New York City and
Geneva, have slipped about 15 to 20 percent in the past two months
as dozens of new apartment buildings opened in Williston, Watford
City and other oil hub cities.
Growth in demand has slipped because the plunge in crude oil prices
has led to cuts in capital spending by energy producers.
There are still about 1,800 energy-related jobs unfilled in the No.
2 U.S. oil-producing state, and there is still demand for
apartments. But the accommodation shortage is nothing like it was
when the state's oil boom began six years ago. As new developments
start leasing, tenants are able to negotiate lower rents.
"You're starting to see prices fall this year as more units come
online," said Terry Metzler of Granite Peak Development, which has
built apartments and a shopping center in Williston, considered
capital of the state's oil boom, and has an additional 480
apartments and houses under construction.
When the state's oil boom began in 2009, prospective tenants swapped
stories of sleeping in cars overnight because there wasn't enough
housing. The dozens of new properties opening in the past two years
and at least 20 more opening in 2015 have helped put an end to that.
 Property managers, who only a few months ago could heavily
scrutinize potential tenants and reject anyone whose credit or
behavior was in doubt, are now so eager for move-ins they're all-but
volunteering to carry boxes.
Williston issued building permits for 1,290 apartment units in 2014,
10 times the rate in 2009. The city issued 333 home building permits
in 2014, the highest in the city's history and more than double
2013.
Many developers say they are confident the state's oil patch will
not go belly up like it did during two previous busts in the 1980s
and 1950s. Stropiq LLC, for instance, is seeking zoning board
approval for a $500 million development just outside Williston that
will include retail and office space, as well as 900 apartments and
townhomes.
These and other projects are moving forward despite recent job cuts
by Halliburton Co and others that have cooled economic growth and
led state officials to predict a drop in oil tax revenue this year.
Property managers say that, for now, they still have no problem
filling spots as they become available, especially since prices are
falling. Occupancy data are not aggregated across the region, but
checks with individual properties showed most are 92 percent to 95
percent full.
HOT TUB AND HAPPY HOUR
At Williston's Dakota Ridge, a luxury complex of three-story
buildings owned by private equity firm Granite Peak Partners Inc
(not affiliated with Metzler's group), a two-bedroom apartment
rented for $3,200 per month in early 2014.
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A year later, even with recent recently added perks like a 10-person
hot tub and free alcohol and snacks in the common lounge, the same
apartment goes for $2,600.
KKR, the private equity giant, is slashing rents at Prairie Pines, a
Williston upscale apartment complex it owns with CP Realty, with
two-bedroom units costing $2,300 per month, 18 percent cheaper than
last summer.
"I could see the quality of life improving for some people if
they're not worried each month about how they're going to make
rent," said Justin Hammer of IRET, which owns apartment complexes in
Williston and Minot, some of which it has begun pricing below market
rates to appeal to families and retirees.
Community leaders have reacted to the apartment price drop with
barely concealed glee, describing it as a sign the region is not
just a bedroom community for roustabouts anymore.
"You can't build a vibrant community with services, quality of life
and families when you have some of the highest rents and costs in
the nation," said Shawn Wenko, Williston's director of economic
development.
In Dickinson, home to the regional office of the state's largest oil
producer, Whiting Petroleum Corp, the price of a two-bedroom
apartment at Sterling Group's Sierra Ridge was cut last week to
$1,775 from $2,159.
And yet real estate companies still see room for more developments.
"We still, even with all we're building, don't have enough housing
in this region," said Metzler of Granite Peak Development.
(Reporting by Ernest Scheyder; Editing by Cynthia Osterman)
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