City smashes development record with $250M in construction in 2016 – The Missoulian

Missoula broke a record for new construction in 2016, with nearly a quarter of a billion dollars worth of development construction costs permitted by the city.

From new banks to housing to multi-story business offices, the landscape of the Garden City was drastically changed as investors bet that the economy here is on the rise. That was good news for many workers, especially those in the construction industry.

According to Mike Haynes, the director of the citys Development Services office, the total market value of construction of building permits issued from January to December was a whopping $248.7 million. That shatters the previous record of $184 million worth of development in 2015.

Calendar year 2016 saw an unprecedented level of development activity in the City of Missoula with 1,529 building permits issued, Haynes said.

The largest commercial projects permitted included the new downtown Stockman Bank building worth $16.2 million, and the new nine-screen, dine-in Carmike Theater at Southgate Mall worth $7.9 million. There were also major projects at public institutions, including a $10 million Grizzly Champions Center addition on the University of Montana Campus and $12 million in local Missoula County Public Schools construction. Major renovations are happening at Rattlesnake, Lowell, Franklin and Paxson Elementary Schools, as well as Big Sky High School, part of the $158 million schools bond passed by voters in 2015.

The largest residential projects were the 164-unit Front Street Student Housing Project valued at $25.2 million, the 69-unit Cambium Place Apartments at the Old Sawmill District worth $16.1 million, the 114-unit Halling Farms Apartments on Mullan worth $8.5 million, the 2625 Dearborn Condos worth $8.5 million, the Polleys Square C building worth $4.2 million and the 36-unit 4100 condos worth $4.7 million.

The total number of residential units permitted in 2016 rose to an all-time high of 775 units, Haynes said. Total permits issued (including plumbing, mechanical and other permits) have risen steadily to almost 7,700 in 2016.

The market value of construction projects in Missoula the past four years.

The citys numbers are based solely on the cost of constructing the buildings. That means the total value excludes the cost of acquiring the land, demolition and site preparation and a myriad of soft costs like planning, design, engineering, financing costs and real estate fees. So, for example, the total project cost for the Front Street student housing project is actually $38 million, compared to the $25.2 the city recorded as construction costs. Therefore, the total investment made by developers in Missoula is much larger than the $248.7 million figure.

Since the start of the citys fiscal year 2017 in July, there have been 111 single-family housing building permits issued by the city for a total construction value of $11.82 million. Thats an increase over the same time frame in fiscal year 2016, when only 83 single-family homes were permitted for a value of $8.25 million.

Next year could see some huge projects in Missoula as well. A Bozeman developer will be building a $35 million hotel in downtown Missoula at the site of the Mercantile building, and a group of separate local developers intend to break ground on $150 million in developments at the Riverfront Triangle/Fox Site at the corner of Front and Orange streets. Several more projects at the Old Sawmill Project could be permitted in 2017, including possibly another large student housing project.

James Grunke, the president and CEO of the Missoula Economic Partnership, said that he's heard of plans for projects worth an estimated $500 million that could be set in motion over the next two or three years.

"I think the trend will continue for at least the next two or three years with very similar numbers," he said.

Grunke attributed the building boom partially to pent-up demand from the Great Recession, so developers are catching up on activity. He also believes more multi-family housing will be built in the next few years because there is such a lack of inventory right now.

"I'm pretty bullish about the future," he said. "And so are a lot of the people I talked to. At the economic outlook seminar presented by the Bureau of Business and Economic Research two weeks ago, they polled the audience, and that was the general tone."

Grunke said Missoula's main challenge will be attracting skilled workers to keep up with the growth in jobs. Missoula's low unemployment has business owners worried about a workforce shortage.

"It's not always a bed of roses, but I see good things happening," he said. "It's a good time to be in Missoula."

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City smashes development record with $250M in construction in 2016 - The Missoulian