If you have the cash, you can get some pretty good deals in the Williston market. That’s according to Real Capital Solutions, a large private equity and investment firm that does business around the globe.
The company has snapped up more than $100 million in properties in the Williston-Watford City region in just the past 11 months, and they are actively seeking more value-add opportunities. Most of the properties they’re seeking are either apartments or large industrial complexes.
They aren’t the only ones buying into a more settled Williston market.
Jeff Lunnen, managing principal and broker for Lunnen Real Estate Services, has also been working with various groups shopping around in the Williston-Watford City region for multi-million dollar opportunities.
One company, Lunnen said, purchased $79 million worth of apartments. Another wants to assemble a portfolio of large industrial properties.
“That’s obviously a profile we haven’t seen in a while,” Lunnen said.
The return of private equity to the region marks a turning point in the boom-bust cycle of an economy that is closely tied to commodities, primarily oil and agriculture. It suggests an easing in capital markets — spooked by the downturn — which is vital to deal-making.
Veno knows of several large deals that collapsed because financing was unavailable.
“Some areas boom-bust so hard that banks just won’t loan money at all,” he said.
Private equity firms, however, play by different rules. That allows them to turn the corner quickly.
For Real Capital Solutions, this has meant snapping up several apartment complexes that were for sale below replacement costs.
But it takes more than just a bargain like that to seal the deal.
“We look hard at the entire economy, and what is going to be producing jobs,” Veno said. “The analysis of the market before we go in is very significant.”
That gives the company a lot of confidence in where the Oil Patch is headed.
“We are fairly bullish on the future of things (in Williston and Watford City),” Veno said. “And we think that once the natural gas flaring issue gets solved and processing takes off there in McKenzie County, that it is going to boost the entire area.”
Lunnen, meanwhile, agreed that the Williston market appears to be in a steady growth period.
“The real estate market at least has made it through the stress test of 2016 and 17, and it has been steadily getting busier and more stable since 2017 to today,” he said. “Right now, I’d say it is a pretty healthy market. It’s not the boom it was in the past, but we’ve got good levels of occupancy in the industrial space, and we’re seeing we’re hiring signs everywhere around town.”
There’s so far no sign that the supply of industrial real estate is running short, Lunnen added.
“It’s been kind of like musical chairs,” he said. “We lease a couple of industrial properties and then a couple more come on the market. Inventory levels have been relatively stable, and the prices have kind of found, for the last year or so, relative stability. But they are trending up.”