Missoula development builds on strong foundation

Construction continues this spring on units being built on Charlo Street in Missoula's Northside neighborhood.

Firm foundation Missoula sees strong level of construction in start of 2020

DAVID ERICKSON

david.erickson@missoulian.com

Missoula saw a robust level of construction activity in the first three months of the year, although those numbers don’t reflect much of the effects of the coronavirus pandemic.

According to the City of Missoula’s Development Services Office, staff issued 1,656 building permits in the first quarter of 2020. The total market value of construction for building permits issued from January through March was $43.7 million. That’s about twice as much market value of construction as was issued in the same time period in 2019 and the strongest first quarter since 2016.

Residential construction activity was also brisk. "In this three-month period, building permits were issued for a total of 111 residential units comprising 99 single units, 4 duplex units and 8 multi-units,” said Alicia Vanderheiden, the office’s business manager, in a report. “39 of these units were approved through a Townhome Exemption Development (TED) process.”

Market value of construction in Missoula

The TED process allows developers to build multi-family housing without going through the rigorous subdivision regulations while still having certain requirements.

Gov. Steve Bullock issued a stayat-home order on March 26, and it’s still unclear what level of construction activity occurred from March through June. However, construction was still considered an essential business, so projects in Missoula continued. The numbers for the second quarter have not been processed yet, Vanderheiden said.

The total market value of construction of building permits issued in all of 2019 was $228.9 million, which is $5 million more than 2018, but still short of the level of development activity seen in 2016 and 2017. In 2017, a record $277 million worth of construction was permitted in the city. A total of 7,633 permits were issued in 2019 compared to 8,354 permits issued a year earlier. "The distribution of permit type was comparable between the two years,” Vanderheiden said. "Of the 455 total residential units recorded in 2019, 81 were approved through a Townhome Exemption Development process.”

Several large-scale projects are underway in Missoula, including work on an expanded Missoula International Airport and a new $36-million Missoula Public Library. The Department of Veterans Affairs is building a huge new clinic on West Broadway, and DJ&A Engineers, Planners and Surveyors is building a multi-story office building on West Broadway as well.

Other large projects, including a proposal for a large civic events center, hotel, restaurants, condos and plaza at the Riverfront Triangle are facing uncertainty because of the pandemic and the economic recession it has caused.

According to Matt Mellott of Sterling Commercial Real Estate Advisors in Missoula, 2020 is on pace to see 35% fewer multifamily housing units built compared to 2019. Over the past 12 months, according to Mellott, 921 new apartment units have been delivered. In that same time frame, 901 units have been absorbed by the market and there are 90 units currently under construction.

“Missoula is a supply-constrained market,” Mellott said in a recent report. “The supply expected to come online within the next 6-12 months is inadequate to meet demand, unless population growth stops or reverses. 176 units are expected to deliver in the balance of 2020.”