Property Management
Property Development

Energy boom leads to development in Douglas

December 5, 2014

pump jack
Texas Cottonfield and Pumpjack. By Ralf Kiepert (Own work) via Wikimedia Commons

Energy boom leads to development in Douglas

CASPER, Wyo. — Booms and busts are written on well-worn pages in Wyoming’s history book, and developers study them intently before investing the time and money to build a neighborhood.

The Douglas housing market was already tight when oil and gas activity began picking up about three years ago. The shortage has only worsened since drilling quickened.

Developers blame the shortage on the rigorous process of securing money, a subcontractor bottleneck and an unrelenting tide of people flowing into Converse County. They say they are building for the long term, not chasing a tide of temporary workers who will inevitably leave.

In the last half of 2013, vacancy rates dipped below 2 percent. There seemed to be more people everywhere, said Converse County Treasurer Joel Schell. However, no official data documents how many have moved to Douglas and how many of those are just temporary, he noted.

The lack of demographic data makes planning harder for people like Scott Sutherland, director of real estate procurement for Casper-based Granite Peak Development.

Sutherland explained reliable census data is available for places like Casper and Cheyenne but not for Douglas. That means hiring a consultant to complete a housing study.

He compared it to trying to count the number of homeless people in a city, if those homeless people were spread out around an entire region.

Consultants take into account variables ranging from the number of illegally parked trailers to how many people are employed near Douglas but live in Casper, where housing is available.

It’s more art than science, so consultants tend to be conservative when estimating how many housing units are needed in an area, Sutherland added.

Related: Our energy boom: Market currents

“The data may not be as good, and it is more expensive,” Sutherland said. “It can be a detractor for a lot of people that have a gut feeling something is going on, but to provide proof to a bank is a whole different story.”

Granite Peak is the developer for the Douglas Business Park, a 37-lot, nearly 50-acre project ringing the planned Eastern Wyoming College campus. The project was originally designed for industrial use, but conversations with city leaders and approval of a bond for the campus led Granite Peak to set aside much of the property along the river for apartments and condos.

Another challenge is scale. All construction projects have fixed costs, regardless of their size. Large developments are able to spread those costs throughout the project, making them more economical than smaller ones.

That’s why it’s cheaper to build in Casper than Douglas, which, with its smaller population, is less likely to economically support a larger project, explained Granite Peak partner Dan Guerttman.

“So where are you going to build if both places have the same demand?” Guerttman pointed out.

Still, the math is adding up. Sutherland said he doubts any developers are questioning whether Douglas’ boom is a short-lived bubble ready to pop. Consequently, he’s seeing more companies hit the throttle.

But the acceleration comes with its own set of problems in a small town with a limited supply of subcontractors.

Sutherland said Granite Peak must reach farther outside the region to find builders who aren’t already busy. In the recent past, Colorado contractors helped keep costs down. Today, firms up and down the Rocky Mountain region and all the way into North Dakota are busy in their own backyards.

And that narrows profit margins further. Demand is still high enough, however, to propel several big projects in Douglas forward.

Douglas’ records recognize 295 licensed contractors, 17 more than last year, and building inspections have skyrocketed from 527 in 2013 to 739 and counting this year.

“The number of inspections tells the story. That’s a huge increase,” said Tony Tolstedt, Douglas city administrator. “It’s a little bit of a two-headed monster, because we want to promote good development . (hold) builders accountable but also (streamline) so we are friendly to the development the community needs.”

The city recently passed a comprehensive development plan and adopted updated building codes in an effort to keep ahead of major changes.

One of the biggest changes is the proposed Seven Trails development, a 1,300-acre residential, commercial and recreational project planned for west of Douglas.

The project is several years in the making, said Dustin Ewing, general manager of Wagonhound Land and Livestock Company, and was not precipitated by the boom.

“We started this whole vision before this energy boom started upon us. Now we just need to stay true to our vision, and we think Douglas can grow here in a quality way,” Ewing said.

Seven Trails’ footprint is one-third the size of Douglas’ existing borders, although Ewing said much of that space would be dedicated to parks, trails and open spaces. The area will feature restaurants, homes and possibly the city’s new recreation center.

Ewing hopes to start building streets late next year but emphasized Seven Trails is a 20-year project, not a flash in the pan.

The people of Douglas hope the same can be said of the boom times.


Information from: Casper (Wyo.) Star-Tribune, http://www.trib.com