COVER STORY: Fargo, Bismarck expected to see continued commercial growth

Inman News listed Fargo number six and Bismarck number nine in the list that was released earlier this year.

Kyle Holwagner, Commercial Broker Associate for Daniel Companies in Bismarck, believes the two communities will continue to see steady and predictable growth. “At the current time inventory of commercial and industrial properties in western North Dakota is limited,” he states. “With the demand high and the supply low, this will allow developers and investors who are seeking opportunities to invest in strong communities like Bismarck and Fargo. The commercial development in the next five-to-seven years will be dynamic.”

Lance Ziebarth, President-Construction for Roers Construction, says although the construction industry was particularly hard hit throughout the country be recession, Fargo and Bismarck experienced a slowdown, but were still fair markets supported mostly by public building projects.

“What we are seeing now is some strength in the market due to private companies filling some pent up need for new facilities or expansions,” Ziebarth comments. “We also do not see the vacancies in the retail and commercial markets that are seen in most of the rest of the country. Thus the real estate market is seeing the same surge.”

Matthew Durbin, an agent with Konrad Olson Commercial Real Estate in Fargo, ND, says primary sector job growth will be the biggest factor impacting commercial development. “I don’t foresee a big increase in commercial building in 2011 and 2012,” he says. “Fargo still has plenty of vacant commercial space to absorb before we see large scale commercial development like we did in the early 2000s.”

Inman News examined housing, economic, and demographic data for metropolitan areas nationwide in compiling a list of 10 housing markets that are showing signs of strength and may outperform other housing markets in 2011 in several key metrics.

To compile the list, Inman News considered markets with low unemployment rates, high median sales price growth, growth in the number of building permits issued, and a rise in in-migration from other states. It also considered population growth, projected job growth, affordability, low foreclosure activity, median household income growth, fewer average days on market for for-sale properties, and growth in occupied housing units.

In its assessment of Fargo and Bismarck, the online publication sites North Dakota benefiting from the oil boom in the western part of the state. In addition, it assesses that the Fargo market is home to several oil, agricultural, medical and technology companies, including Microsoft, that provide ready jobs for graduating students.

As for Bismarck, along with enjoying one of the countries lowest unemployment rates, Bismarck received the highest job-growth projection from Moody’s Analytics of the 10 markets. The economic analysis and forecasting company predicted a 3.3 percent job growth in Bismarck between the third quarter of 2010 and the third quarter of 2011, compared with 1.9 percent nationally.

There is a correlation between real estate market and commercial building. “The correlation is based on employment and population growth and demand,” Holwagner explains. “More people, more jobs, more opportunities. The opportunities in the areas of commercial and industry growth like agriculture, energy, and petroleum will continue to expand and are mostly based on new technology. The natural resources of North Dakota and technology will drive the real estate market including commercial development.”

The Bismarck-Mandan market area is experiencing growth and demand in several areas including medical space, hotel and restaurant development, light commercial, and industrial space. “With the population growth there will also be the need for new schools, medical facilities, and public infrastructure,” Holwagner adds.

In Fargo, Ziebarth says the community is already seeing some resurgence in the commercial real estate market. “I think our North Dakota conservative nature kept the retail and commercial markets from being overbuilt as much as they were in the rest of the country, so we think we will continue to see strengthening,” Ziebarth states. “We all know what a diversified economy we have here, and with medical and technology companies committed to growth in our community, and the agricultural and industrial businesses thriving, the demand created by those industries and spin-off retailers and office clients will continue to push our economy.”

Overall, Durbin believes vacancies will continue to decrease as the market slowly begins to absorb the existing inventory. “As employers experience job growth, I expect to see a couple of new office and industrial facilities under construction in 2012.” PB

Alan Van Ormer - avanormer@prairiebizmag.com