Many people are curious about the future of real estate in the Bakken, especially with the recent drop in oil prices. Although there is no definitive way to know what the future holds, we will try to do our best using our prior experience and knowledge.
In our opinion, the future is fine. Here is our reasoning:
1. Nothing has changed since July. The region was predicted to grow 3X or more 6 months ago. The only change has been a drop in the price of oil. The price of oil has dropped 50% or more 6 times since 1986. A drop in the price of oil is not an unexpected event. http://www.businessinsider.com/oil-crash-context-chart-2015-1
2. There is more demand than supply. People want to compare the Bakken to the boom towns of 2007, Las Vegas, Phoenix, etc. The Bakken is very different. The main difference being that in those towns, there was more supply than demand. There were tens of thousands of vacant units. In the Bakken, there is much more demand than supply even with all the building there is not a single vacancy to be had.
3. Rents are expected to fall. We are all well aware the current rents are not sustainable. One does not make a purchase based on rising rents.
4. Banks are and have been extremely tight with financing. There is no over supply or bank crisis on the horizon, in our opinion. The regional banks have been very conservative during the entire boom, so far.
We still firmly believe the Bakken is the opportunity of a lifetime. We continue to build and serve our customers as we have in the past and look forward to doing so for the next 20 years.