The Rent In North Dakota -- Making Floridians Rich

From The Wall Street Journal:

Related Cos., the developer best known for luxury condominiums and big commercial projects, is turning its sights to low-slung apartments on the North Dakota and Texas prairie, where a shortage of housing tied to the energy boom is allowing landlords to command some of the highest rents in the country.

The company, run by Miami Dolphins owner Stephen Ross, last week paid around $300 million for 20 apartment complexes with 3,000 units in Midland and Odessa, Texas, according to people familiar with the transaction.

It also is in advanced talks for a deal on an existing project in North Dakota's Bakken region, and plans to raise up to $300 million for a fund focused on shale-rich communities from desert areas near the Mexican border to the Appalachian basin in the East, the people said. Mr. Ross is following a small band of investors, including private-equity giant KKR & Co. and real-estate firm Westport Capital Partners, into the residential and commercial markets of new and resurgent energy towns a world away from the cities and suburbs where they usually build or buy.

They are drawn by rents that would seem more reasonable in Midtown Manhattan and Silicon Valley, the result of almost nonexistent unemployment and low supply. A two-bedroom apartment in Williston, N.D., for example, can go for $3,000 a month, or more. In nearby Watford City, North Dakota Housing LLC rents a two-bedroom trailer for $2,350 a month. The same rent could fetch a spacious luxury apartment in cities like Las Vegas or Phoenix, or a studio in new towers in New York. "We think it's a unique opportunity," says Justin Metz, managing principal of Related's fund-management group.

There are a heck of a lot of story lines in that story. I remember the articles I posted at the beginning of the boom talking about a a lack of strategic planning for development in the Bakken; and, the conflict of interests by local government to disapprove housing projects. The result: highest apartment rents in the nation. 

Yesterday, I posted a note sent to me by a reader. His observation led me to note that in five drilling units southeast of Williston, operators have spent almost $1 billion in drilling costs alone, so far. The city has about ten drilling units (1280-acre units) within its present boundaries. One just gets the feeling that the boom has not sunk in yet, locally.