Tollberg Homes

Finding oil in the Bakken Shale isn’t an issue. Finding housing is a different story. Energy & Mining International has reported extensively on the oil and gas boom currently happening in North Dakota, which is now the No. 2 oil-producing state in the country, surpassing Alaska and California and second only to Texas in production.

Just as the state’s oil economy has seen a boom, so has its population. Producers flooding the state are bringing hundreds of workers with them and drawing hundreds of others who are seeking employment in one of the few markets still hiring. It also has spurred a number of support industries to move operations to the state. The economic growth has been welcomed by the state, but the influx of workers begs the question of where will they all stay.

“We are in Minot, N.D., which is not really in the heart of the drilling and oil market, but Minot is one of the cities that provides a lot of support and infrastructure for what’s happening in the oilfield and it has a really strong farm economy that over the last couple of years has contributed to economic growth in the area, as well,” explains Nathan Jones, COO of residential developer Tollberg Homes. “Because of all of this, the city of Minot only had a 1 percent apartment vacancy rate over a year ago before a flood that displaced a quarter of the residents.”

The news of North Dakota’s housing shortage was heard eight hours away in Minnesota, which is where Tollberg Homes originated. Though the Twin Cities builder “was quite successful during the housing boom of the 2000s, we could not foresee the severity, duration and speed with which the housing market turned and collapsed” in Minnesota, Jones explains. “We had a rough few years there and saw an opportunity in North Dakota to take our knowledge and resources and put them to work in a growing economy and we came here in December 2010.”

Tollberg still maintains operations in Minnesota but has also opened an office in Minot and houses full-time project managers in the city. The owners and executive leadership, including Jones, President Wade Tollefson, Vice President Greg Chadwick and CFO Lee Dahlberg, operate a rotating schedule so that at least one and often two are in North Dakota to guide the business.

a long-term business
The residential developer averages 45 homes per year and recently purchased lots in Minot’s Pheasant Run development and in Silver Springs located in Surrey, a neighboring town eight miles east of Minot. As the developer gears up for construction in these new developments, it is currently operating in two other neighborhoods.

Tollberg purchased 39 lots in the Eagles Landing development and is wrapping up its last few constructions for this neighborhood. Jones says the company should button up building at Eagle Landing by October, at which time it will turn its focus to another development in Minot called Ballantyne.

“We have 23 lots at Ballantyne and are just starting to get homeowners into that development,” Jones says. “[We had] our first closing in early August. So this will be our next phase, but as a business, we are always looking to the future to see what the next phase is and we are working on a couple of different opportunities in different neighborhoods, as well.”

Tollberg has supplemented this work with off-site builds for single-lot landowners looking for custom-built homes. Also, after six months working in the area, Minot experienced a devastating flood that displaced a quarter of the city’s residents. Tollberg will complete an estimated 30 flood remodel projects this year.

“We’ve put a lot of people back in their homes, and that’s something we feel really good about as a company,” Jones says. “We have seen some price gouging by some contractors in the market but we steer clear of that. We want to build a sustainable, long-term business here through referrals and fair pricing.”

Jones says that Tollberg Homes is committed to retaining its Minnesota and North Dakota operations. Some of the company’s leaders own and rent residences in North Dakota and have been active in the Minot chamber of commerce. Though it’s committed to the state, the operation does come with some challenges.

“First and foremost, we have a seriously constrained lot supply,” Jones explains. “The supply and demand in terms of buildable lots is out of whack a bit and as a result the prices on lots and raw land have more than doubled in just over a year. This is something that we experienced in Minnesota before the housing slump in the 2000s. It makes us a bit leery and nervous. It’s not sustainable for housing lot prices to keep increasing at the current rate. We would like things to maintain and have some stability, which would in turn create sustainability and long term health of the housing market.” EMI