Missoula sets record in 2016 with $245 million in building permits
By Martin Kidston
It was back in March when city leaders and Stockman Bank executives sank their shovels into the soil to celebrate the groundbreaking of the company's new flagship building in downtown Missoula.
The six-story structure's steel frame has since risen on the site, transforming the corner of West Broadway and Orange Street with the city's latest architectural offering. And while the project remains far from finished, it may stand as a testament to the year that saw Missoula outgrow its big-town reputation and emerge as a small city with a capital “C.”
Over the past year, the city's Development Services has issued building permits valued at nearly $245 million. It's easily a record, surpassing the previous benchmark set in 2015, when Development Services issued $190 million in permits.
“It's been an exceptional year as far as development is concerned,” said Mike Haynes, director of Development Services. “I don't know if we'll see that again. I'm expecting a good year in 2017, but I don't think we can expect to continue increasing development on a straight line.”
Construction in Missoula was relatively flat through 2014, with roughly 6,700 permits issued at a value of less than $120 million. But that changed in 2015 when Development Services issued 7,104 permits with a combined value of $190 million.
Seated in his office at City Hall, Haynes reflected on the latest wave of construction permits approved by the city over the past year. While the numbers are lower, the values are far higher and the projects cover nearly all categories, from the institutional building projects at the University of Montana and Missoula County Public Schools, to a significant increase in permits related to housing.
Up through 2015, permits for residential construction never topped 500. That's less than what the city needs to keep pace with population growth. But this year, Haynes said, that trend has been turned upside-down, with permits for nearly 800 new housing units issued across the city.
“In the city, we're estimating that we're growing at about 1,200 residents a year, which equates to about 550 total residential units that we need just to keep up with that growth,” Haynes said. “The story I've been telling the last few years is that we're not even building enough to keep up with growth in the population, which has an impact on the cost of housing, whether it's renting or sales.”
While residential development has seen a general increase over the past five years, it wasn't until this year that it surpassed the threshold needed to keep pace with population growth. Much of that increase has come in multi-family units, and six of this year's residential projects rank among the top 10 construction permits in terms of value.
The new student housing project under construction on Front Street tops this year's list in way of value. Launched by Farran Realty Partners and Lambros Real Estate, that project alone carries a construction value of $25.4 million.
Also under construction, the Cambium Place apartments in the Old Sawmill District ranks third on the list, with a construction value of $16.1 million. Polley's Square, also in the Old Sawmill District, carries a value of $4.2 million, placing it eighth on this year's valuation list.
“For the first year, we've seen that significant increase, especially in multi-family, which is a really good sign,” Haynes said. “Hopefully that will continue for a couple of years to come. That will start to help the price of housing, generally, whether it's sales prices or rental prices, just because there's more on the market.”
Projects holding the most value haven't been reserved for housing. The Stockman Bank project scores second on the list at $16.2 million, while the new Carmike Theater at Southgate Mall ranks sixth at $7.9 million.
While 2017 may not compare with numbers recorded this year, Haynes believes the construction activity will continue. The city's economy is on the mend with an historically low unemployment rate and more businesses competing for skilled workers.
Haynes expects much of the activity to continue in the Old Sawmill District, where a new student housing project may be next to break ground. The expansion and redevelopment both in and around Southgate Mall is also expected to continue next year, as the midtown district moves toward transit oriented development.
Yet topping the list of next year's expectations, Haynes looks to the Riverfront Triangle in downtown Missoula. It's there where Farran Realty Partners is gearing up to construct a new downtown hotel and conference center, along with midrise housing, office space and retail space.
That project, which effectively extends downtown Missoula two blocks to the west, carries an estimated value of $150 million and is moving forward, Haynes said.
“We have been working with the developer on rezoning the property and vacating the right-of-way, and some of the other things that need to be done before construction gets under way,” Haynes said. “There's been a lot of work among the partners in the project to reach an agreement and have a final development concept.”
Haynes said Development Services has been working on the project's early phases over the past year with other city departments, including Parks and Recreation. The developers have said they hope to begin construction in late 2017, and Haynes believes they may be on pace to do so.
“As far as Development Services in concerned, we're ready to see construction start, and we're ready to start permitting some of the early phases of that project,” said Haynes. “We've spent many, many hours on that project working with the development team, helping them get this far in the process. We're always telling them we're ready to review those plans.”
Development Services completed – and the City Council adopted – the new Our Missoula Growth Policy in November 2015, which aims to direct growth and development into the urban core.
Haynes believes much of the city's future growth will follow that goal by capitalizing off vacant downtown lots and exploring opportunities along the Brooks Street corridor, as well as the city's underutilized properties.
“We're really focused on the urban core and trying to get as much development there as possible,” Haynes said. “But growth pressures are growth pressures, and we have to respond when private property owners express interest in development.”
While the city aims to grow inward, the city's outskirts remain attractive to some developers, including Costco, which has proposed building a new store on West Broadway.
While that debate plays out, Haynes said his office will continue working on converting the Brooks Street corridor and developing new design standards. They were requested last year by the City Council – a move sparked in part by public outcry over the Verizon building constructed on a prime downtown corner on East Broadway.
“We have, in just the last few days, selected a consultant to work with (Winter and Co.) and we'll continue working on design standards,” Haynes said. “That's going to take the next year at least, and we'll be providing a lot of work to the consultants on that.”
Contact reporter Martin Kidston at email@example.com