Oppidan has invested $150 million there so far.
Joe Ryan was certain he had a solid sales pitch.
His company, Minnetonka-based Oppidan Investment Co., has built shopping centers nationwide. And Watford City, a fast-growing locale on the western edge of North Dakota’s oil-rich Bakken region, has struggled to provide grocery stores and restaurants as its population surges.
On paper, the two seemed like a match.
But the town planner “looked at my pretty pictures and said, ‘Joe, I could meet with guys like you all day long. Show me something.’ ”
With that blunt-but-earnest challenge, Oppidan stepped outside of its comfort zone. The firm, known for its work with retailers such as Cub Foods, Gander Mountain, Goodwill and Orchard Supply, built an apartment complex, of all things, in nearby Williston.
“We really needed to put our money where our mouth was,” Ryan said recently. “It was so obvious that they desperately needed housing” with the influx of new residents and workers in the region.
Oppidan’s 36-unit apartment complex, called the Gables, leased up so quickly that a second Gables opened earlier this year. Then, in June, the company opened Pheasant Ridge Apartments, a 42-unit complex in Watford City.
“That was the fastest way for us to prove that we were for real,” Ryan said. Since then, Oppidan has completed $150 million in retail and residential projects in Dickinson, Minot, New Town, Stanley, Tioga and Williston. More than 1 million square feet of commercial projects have been done in just over two years.
The firm has partnered with St. Cloud-based grocer Coborn’s to build six grocery stores on the state’s western flank under the Cash Wise banner. These stores typically anchor shopping centers with other retailers, such as restaurants, dollar stores, pet-food outlets, tractor supply and even Red Wing Shoe stores (famed for their steel-toed boots).
In Minot, closer to the center of the state, the city is still rebuilding after a devastating flood in 2011. Oppidan recently announced that Gordmans, an off-price department store chain, opened in Minot to help anchor Southgate Crossing, a shopping center Oppidan developed in the city’s southwest corner.
With an eye toward the future, Oppidan opened an office in Watford City in April. “Clearly, being on the ground and in the market will help us,” Ryan said, noting the lack of airport access and hotels made it difficult at first to parachute into the area for business purposes.
Andy Peterson, president of the Greater North Dakota Chamber, agrees. “If people think they’re going to drive a pickup truck to North Dakota, back it up and load it up with cash and then leave, that is not the way we do business,” he cautioned.
Relationships and reputation — assuming it’s a good one — loom large on the oil frontier. Peterson travels all over the country and says interest in his state is intense. “Everyone knows about us,” he says. But understanding that every small town in the state “has very long streets, meaning we all know each other,” is critical for outside businesses to grasp if they want to succeed there.
In Oppidan’s case, Ryan was initially skeptical about investing in North Dakota. The current boom is certainly not its first — the 1970s and 1980s surges went bust when oil prices collapsed, causing real estate holes in communities. That’s why developers may still be skittish about prospects in the state, said Herb Tousley, director of the Shenehon Center for Real Estate at the University of St. Thomas. “But there is an upside now,” he noted.
Before investing in the region, Ryan and his team researched the economic underpinnings of the current surge, which is largely fueled by new ways of drilling, particularly hydraulic fracturing or “fracking.”
That homework was bolstered in April when the U.S. Geological Survey estimated that the supply of oil and natural gas in North Dakota is far more expansive than initially thought. It was determined that there are 7.4 billion barrels of recoverable oil in the western part of the state, South Dakota and Montana — more than twice the oil the survey estimated could be recovered five years ago. The USGS nearly tripled its estimate of the natural gas available in the area, as well.
“They’re not exploring for oil; they’re mining it,” Ryan said. Indeed, the Federal Reserve Bank of Minneapolis says the current Bakken oil boom is five times larger than the oil boom of the 1980s.
Oppidan executives stayed in a “man camp” — a series of no-nonsense barracks for workers — to see what life on the oil-rich prairie was really like for those in the fields. “It was a great experience; it helped us understand the needs of people out there,” Ryan said.