Welcome!

News Feed Item

The Shale Surge: $80 Billion Economic Boom Is Reshaping North American Cities

Oil and Natural Gas Production Is Paving the Way for New Restaurants, Hotels, Homes, Stores and Improving Lifestyle in Small Towns and Big Cities in the U.S. and Canada

HOUSTON, TX--(Marketwired - July 21, 2014) - JLL (NYSE: JLL) -- Shale zone communities have discovered yet another benefit from their surging economic growth: more of everything. Small towns like Williston, North Dakota, which has relatively little retail, are now catching the eye of major brands like Whole Foods and Trader Joe's.

With $80 billion expected in annual investments over the next six years and rapid population expansion, local infrastructure construction and real estate development in shale formation areas like the Bakken in North Dakota and Eagle Ford in Texas are turning small outposts into genuine boom towns.

According to JLL's new 2014 North American Energy Outlook, major metropolitan areas are benefitting too, with "surge cities" fuelled by oil and natural gas production -- growing at more than twice the pace of their peers.

"The energy boom is having a dramatic effect on the infrastructure of these boom towns and on the economies of the hubs that support the oil and gas business," said Bruce Rutherford, International Director and head of the oil & gas practice for JLL. "Sites like Williston and Midland, Texas, Hobbs, New Mexico in the Permian Basin are having a tremendous influx of workers, and those workers need to eat, they need places to shop and they need homes. All of this demands infrastructure that doesn't exist, and it needs to be built.

"It also creates a business that has to be supported regionally which means jobs and a surge of economic activity in cities like Houston, Denver, Dallas and Pittsburgh. We are just scratching the surface of the benefit on our local economies."

These developments have taken on new urgency as the U.S. prepares to join Canada as a net exporter of oil and gas as early as 2015 according to the International Energy Agency. JLL's Energy Outlook quantifies this progress-which for some rapid-growth communities is already long-overdue.

"The U.S. Commerce Department recent announcement to open the door to more U.S. oil exports is an incredible economic opportunity," Rutherford said. "Increase in crude production could lead to a nearly $73 billion rise in the U.S. GDP in 2016. That means more jobs and economic growth in these communities."

By creating communities where shale workers want to live and bring their families, shale zones can attract the right talent to produce oil and gas in a timely manner from every land lease. So it's no surprise that apartments, stores, roads and hotels are being built at a rapid pace, property values are rising and vacancy rates are plummeting. 

Surge Cities: A Zone-by-Zone Infrastructure Progress Report
Like all real estate, shale zone infrastructure development is unique to each local market. Here's how critical infrastructure is progressing in each shale zone, and its ripple effect on neighboring major cities, as documented in JLL's report:

  • The Bakken (North Dakota and surrounding areas): Real estate is at a premium and retail development needs are profound. The average retail square foot per person is at 12.05 in North Dakota, nearly 50 percent less than the U.S. average. Man camps are commonplace, due to low housing vacancy rates and rising home prices, which are expected to jump 9.69 percent by 2018.

    Boom Town: Williston, North Dakota. Often used as the face of the shale zones, Williston is a relatively new market with little existing retail to support its rapidly growing population. Apartment rents are above $2.50 per square foot. The future is bright: Williston offers an expectation for a 30-year window of prosperity, coupled with a flurry of new housing and retail developments. One example: Swiss real estate company Stropiq is planning a $500 million, 219-acre development, featuring one million square feet of retail, entertainment and hotel space along with offices and residential plots.

    Surge City: Denver, Colorado. Energy-related tenants occupy 25 percent of top properties in Dener's central business district. Energy industry employment in the region is expected to remain strong for the near future, buoyed by its proximity to higher education and public policy programs, encouraging growth. Denver has some of the strongest apartment rental growth rates in the country as vacancy rates have dropped to a historical low. The Mile-High City's office market is typical of a shale zone surge city, where energy companies are battling for prime space, giving landlords the upper hand in lease negotiations for office space. Meanwhile, growing small- and mid-size energy companies are scaling up, seeking top properties in the central business districts to attract talent.
  • Eagle Ford (South Texas): The supply of housing and retail developments are mostly in-check with demand, although there is a shortage of restaurants. Home values should see a modest increase through 2018.

    Surge City: Houston. Energy tenants take up 51 percent of Houston's top central business district office properties, and demand remains strong as larger energy firms divide into smaller, more focused units that require separate space. New developments continue to escalate in Houston's Energy Corridor, with nearly five million square feet of office under construction. Until new construction makes headway, the office market will have limited options through 2015. New apartment complexes are also under heavy construction, as vacancy rates have dropped from 12.9 percent in 2010 to 5.5 percent today.
  • Marcellus (Pennsylvania, West Virginia, Ohio and surrounding areas): Given its proximity to major cities and its abundant gas production, the infrastructure challenges in the Marcellus shale are comparable to aging infrastructure in cities, contrasted with lack of usable real estate in small towns. In production communities, retail developments have blossomed, but grocery stores remain in short supply.

    Surge City: Pittsburgh. Most energy companies reside within suburbs, but five percent of its top-tier office properties in the CBD are occupied by energy tenants. Vacancy rates are at record lows with large blocks of space virtually nonexistent. Approximately 1.5 million square feet of new office property construction is underway, but rents will continue to jump through 2014. As with other shale zone surge cities, large energy companies are building sprawling campuses in the suburbs. As these companies move, prime office space is expected to open up in the CBD in 2015. 
  • Barnett Shale (East Texas, Northwest Louisiana and surrounding area): A surging population has left housing in short supply, with home values expected to increase 36.1 percent through 2018. The area is hungry for grocery stores and restaurants.

    Surge City: Dallas-Fort Worth. A long-time oil-rich economy, the Dallas-Fort Worth metro area continues to reap the economic benefits of energy production -- not only from Haynesville but more directly from production in the Barnett Shale. Population growth is roughly twice the national average and apartment vacancy rates plummeted to 4.6 percent from 10.3 percent in 2010. Energy tenants occupy 28 percent of the prime real estate in the CBD of Fort Worth, and nine percent in Dallas. The market for office space remains tight, but organic growth among energy companies is generally slowing, opening more space as companies right-size their operations or look to the suburbs.

The JLL Energy Outlook 2014 offers a detailed analysis of the current and future real estate and infrastructure development in North American shale markets and nearby cities. The findings highlight a dire need for real estate development, coupled with unique market dynamics in each shale zone. Download the full report here.

For more news, videos and research resources on JLL, please visit the firm's U.S. media center webpage. Bookmark it here: http://bit.ly/18P2tkv.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4 billion, JLL has more than 200 corporate offices and operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $48.0 billion of real estate assets under management. JLL is the brand name of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, will discuss the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports. The session will include a working demo and a technical d...
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management solutions, helping companies worldwide activate their data to drive more value and business insight and to transform moder...
The Transparent Cloud-computing Consortium (abbreviation: T-Cloud Consortium) will conduct research activities into changes in the computing model as a result of collaboration between "device" and "cloud" and the creation of new value and markets through organic data processing High speed and high quality networks, and dramatic improvements in computer processing capabilities, have greatly changed the nature of applications and made the storing and processing of data on the network commonplace.
DevOps at Cloud Expo – being held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real results. Am...
SYS-CON Events announced today that Bsquare has been named “Silver Sponsor” of SYS-CON's @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. For more than two decades, Bsquare has helped its customers extract business value from a broad array of physical assets by making them intelligent, connecting them, and using the data they generate to optimize business processes.
I'm a lonely sensor. I spend all day telling the world how I'm feeling, but none of the other sensors seem to care. I want to be connected. I want to build relationships with other sensors to be more useful for my human. I want my human to understand that when my friends next door are too hot for a while, I'll soon be flaming. And when all my friends go outside without me, I may be left behind. Don't just log my data; use the relationship graph. In his session at @ThingsExpo, Ryan Boyd, Engi...
SYS-CON Events announced today that Pulzze Systems will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Pulzze Systems, Inc. provides infrastructure products for the Internet of Things to enable any connected device and system to carry out matched operations without programming. For more information, visit http://www.pulzzesystems.com.
Fact is, enterprises have significant legacy voice infrastructure that’s costly to replace with pure IP solutions. How can we bring this analog infrastructure into our shiny new cloud applications? There are proven methods to bind both legacy voice applications and traditional PSTN audio into cloud-based applications and services at a carrier scale. Some of the most successful implementations leverage WebRTC, WebSockets, SIP and other open source technologies. In his session at @ThingsExpo, Da...
SYS-CON Events announced today that Secure Channels will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. The bedrock of Secure Channels Technology is a uniquely modified and enhanced process based on superencipherment. Superencipherment is the process of encrypting an already encrypted message one or more times, either using the same or a different algorithm.
Traditional on-premises data centers have long been the domain of modern data platforms like Apache Hadoop, meaning companies who build their business on public cloud were challenged to run Big Data processing and analytics at scale. But recent advancements in Hadoop performance, security, and most importantly cloud-native integrations, are giving organizations the ability to truly gain value from all their data. In his session at 19th Cloud Expo, David Tishgart, Director of Product Marketing ...
Almost two-thirds of companies either have or soon will have IoT as the backbone of their business in 2016. However, IoT is far more complex than most firms expected. How can you not get trapped in the pitfalls? In his session at @ThingsExpo, Tony Shan, a renowned visionary and thought leader, will introduce a holistic method of IoTification, which is the process of IoTifying the existing technology and business models to adopt and leverage IoT. He will drill down to the components in this fra...
The vision of a connected smart home is becoming reality with the application of integrated wireless technologies in devices and appliances. The use of standardized and TCP/IP networked wireless technologies in line-powered and battery operated sensors and controls has led to the adoption of radios in the 2.4GHz band, including Wi-Fi, BT/BLE and 802.15.4 applied ZigBee and Thread. This is driving the need for robust wireless coexistence for multiple radios to ensure throughput performance and th...
SYS-CON Events announced today the Kubernetes and Google Container Engine Workshop, being held November 3, 2016, in conjunction with @DevOpsSummit at 19th Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA. This workshop led by Sebastian Scheele introduces participants to Kubernetes and Google Container Engine (GKE). Through a combination of instructor-led presentations, demonstrations, and hands-on labs, students learn the key concepts and practices for deploying and maintainin...
Enterprise IT has been in the era of Hybrid Cloud for some time now. But it seems most conversations about Hybrid are focused on integrating AWS, Microsoft Azure, or Google ECM into existing on-premises systems. Where is all the Private Cloud? What do technology providers need to do to make their offerings more compelling? How should enterprise IT executives and buyers define their focus, needs, and roadmap, and communicate that clearly to the providers?
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.