The historic Missoula Mercantile is up for sale, with its owner asking $4.5 million for the downtown Missoula icon.

Octagon Partners purchased the building for $2.3 million in 2011 and has since spent roughly $1.2 million on demolition, abatement and improvements, said J.P. Williamson, a founding partner of Octagon.

The Virginia-based development firm specializes in the redevelopment of historic buildings and envisions the former Macy’s as a mixed-space property, with retail, restaurant, office and nonprofit tenants.

Interest from retailers who would be anchor tenants in the 80,000-square-foot building has been strong, said Jed Dennison, owner and broker of Zillastate Realty, which has listed the building.

An office tenant to occupy the bulk of the second floor remains elusive, though, Dennison said Friday.

Abatement for asbestos and lead is already finished and the building, which is listed on the National Register of Historic Places, has been restored to its load-bearing original walls, he said.

The original Mercantile was built in 1877 and then was added onto over the years. Wood floors and tin ceilings run throughout the building. Skylights on the second floor bring in natural light, and the north side of the building is ideal for restaurants, Dennison said.

A buyer would have to finish updating the building and getting the structure to the “vanilla shell” stage – drywalled, fire safe and with services in place. That process is expected to take about 14 months and cost upward of $12 million, although new market and historic tax credits would offset part of the expense, he said.

Once the space is updated, tenants would be responsible for customizing their areas, he added.

Although Williamson didn’t divulge details, he said two parties have expressed interest in purchasing the building, and their interest spurred putting a formal asking price on the property.

Listing the building enables Octagon to solicit other potential buyers, he said.

***

Several developers became interested in the building after it was highlighted during a developers showcase hosted by the Missoula Economic Partnership in June, said James Grunke, CEO and president of the partnership.

While his organization hasn’t been involved in securing tenants for the building, Grunke said the partnership has always been interested in returning the building to use.

The two-story brick building is a cornerstone of downtown Missoula, he said. “Secondly, it is a large part of Missoula’s persona. So getting that back into use, it would only bode well for the downtown.”

David Bell agrees.

Bell, president of ALPS Corp., has been exploring options to purchase the building for several months and said any investment would be separate from ALPS, which is housed in and owns the Florence Building across Higgins Avenue from the Mercantile.

The Merc’s open floor plan and a finished abatement process, as well as the structure’s prominent spot in Missoula history, make it appealing. The question is whether the price the potential buyer identifies as fair is close enough to the seller’s valuation to make a sale, he said.

Regardless of whether he further pursues purchasing the building or not, Bell said, he hopes it is revitalized. “My main motivation is to see the Mercantile building be a success, and I may or may not be a part of the process.”

***

The Merc is not the first project Octagon has undertaken outside of Virginia, as the pool of historic buildings available for redevelopment is limited. Currently, the company is working on a project in North Carolina, Williamson said. “It just proves to be more difficult to make it work so far away.”

However, when the building sells, Octagon would love to remain involved in the project, he said.

In fact, Williamson said his preference would be to find an office tenant and for Octagon to continue with the building’s development without selling. “We’re willing to not sell it if we’re able to identify an office tenant.”

For more information, visit themercmsla.com.

Reporter Alice Miller can be reached at 523-5251 or at alice.miller@missoulian.com.

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(15) comments

Run - A- Mook
Run - A- Mook

One question.
Why and what/who large store will move into that building, on HIP - STRIP?

Zootownnative
Zootownnative

For your future reference, so you don't sound like an idiot, the "Hip-Strip" is located on the south side of the Higgins St. bridge.

http://www.missoulahipstrip.org/

Objective observer
Objective observer

Unfortunately, that won't prevent him from sounding like an idiot.

Run - A- Mook
Run - A- Mook

@Objective observer

You sir,{and I use the word lightly} have no ideal who I am or
anything about me. For you to judge if someone is an idiot or
not, just confers that fact that you must be by your actions and
posts that you are and must be a left-wing nut.

As I told zoo above, I have only drove up and down Higgins Ave.
a few times. From the looks of it, it is hard to tell what starts where
and ends where. It is one long zoo.

In closing, as I said to zoo above, as far as sounding like an idiot.
that seems to fit you and the zoo better than me or anyone else.

Objective observer
Objective observer

Run-a-mook

So you've only driven down Higgins a couple of times and so don't even know where the hip strip is, yet comment about it anyway. The CLARK FORK RIVER and bridge separate the hip strip from downtown. So no, it is not one long zoo.

Run - A- Mook
Run - A- Mook

Zoo -- you could not prove it one way or the other with or to me.
The few times that I have drove up or down Higgins Ave, it looks
like a zoo to me. So maybe the better question would be, Who/what
and why would a large store move into a building on Higgins Ave?

As far as sounding like an idiot, that fits you better than me.

I just called a lib a no-no. Lets see if the Missoulian puts this up.

NoturAverageBear
NoturAverageBear

Run - A - Mook, if you don't like it here, why are you here?
If you stay here and continue to make yourself look like an idiot, well, you will be considered an idiot....I mean why does a retired California law enforcement officer want to relocate to a place he hates and complains about, hates and doesn't fit in with the local people, just sits around and talks down about your newly relocated home and to the people there in the local online paper. Dude, it makes you look like an idiot, and a really pathetic one at that!

Bet California would be happy to have you back!
Bet the people here from California would be happy to see you leave -- wouldn't have you around to perpetuate the transient California stereotype.
Careful dude, lest you make yourself look stereotypical!

Run - A- Mook
Run - A- Mook

@NoturAverageBear
Not- I'm not there, I'm over here.
As I have said many times, I don't live in the
city or county of Missoula.
I have a right to live any place I want. I don't hate the place
were I live. It is one of the nicest places in Mt. I fit in very well
with the local people. Most of the people in my home town,
think Missoula is a so-so place. It is the left-wingers who give
it such a bad name. {The Peoples Republic of Missoula}.

DUDE? DUDE? This tells me one of three things,
1. You are a teenager.
2. Have the mind of one.
3. Are a PRO-FESS-OR.

Talk about stereotype, All of the people who post here,
and use the word idiot are left-wingers. This just shows
that the real idiots here are the ones who must use this word.

Objective observer
Objective observer

So you must be a left winger because you just called someone an idiot. See how flawed your logic is?

Hi
Hi

Another New Party / Progressive failure. Remember all the promises which have again amounted to nothing but hot air from City Hall ? The town is littered with them. I can only imagine the pain of paying Missoula property taxes on an empty building like that. BRUTAL, but the New Party will keep hiking taxes until every building is empty. Only the Voter can stop this FAILING left wing madness.

Matthew Koehler
Matthew Koehler

From the February 4, 2012 Missoulian (20 months ago).

Title: Developer says Missoula Merc floor plans, tenants coming together

Opening Paragraphs:

Floor plans for the Missoula Mercantile are all but finished, and the tenants that will occupy the space inside the revamped historic downtown building include a unique mix of businesses.

While Octagon Capital Partners isn't quite ready to release specific tenant names, spokesman Pete Goergen said Friday the list is coming together nicely.

Octagon is the Virginia-based firm that bought the former Macy's building just over a year ago. The company plans to renovate the building while maintaining and bringing back some of its historic features, then filling it with a mix of retail, restaurant, office and nonprofit tenants.

---------------

It seems like Missoula has a trend lately of out-of-state developers soaking up tax credits and making big development claims that never reach fruition. The toxic, soon to be Superfund listed Smurfit-Stone site certainly comes to mind, along with the Merc building.

johnny Dollar
johnny Dollar

Yes....where is Pork Chop John......has he officially blessed the potential sale of his building that houses ALL THOSE tenants that he found?

John Engen has FAILED on EVERY economic enterprise he cast his large shadow on. Instead of gleaning new jobs and commerce, we see empty buildings and lots. Not one to be fettered with losing millions of other people's dollars, Engen wants you to embrace his purchase of St. Pat's.......I mean, Mountain Water (I was confused for a moment......I forgot it was Engen's hero Obama that wants to rule the world of health).

Mini Me.......Jim Flunke and his band of soothsayers and parasites........again.....a colossal failure:

While his organization hasn’t been involved in securing tenants for the building, Grunke said the partnership has always been interested in returning the building to use. This so funny it should be on the Daily Show!

MarkK
MarkK

Larry, You seem to have fallen down and you can't get up! Why not try, and real hard to construct a thought that has any real value to the community. The fact that the Mercantile has been now listed for twice it's market value just goes to show how out of touch so many are regarding the mammoth challenges related to restoring or simply preserving this Missoula landmark. The modern day cost to rehabilitate this building will take nothing less than divine intervention. It is the fault of constant poor city planning and vision of which led to this building demise. I will bet she is, and sadly so, raised in the next two years. Missoula's involvement or (lack of it) regarding true historic restoration is not even a foot note in this cities historic ledger. Mark Kersting, sole restoration practitioner of the Stensrud Building, the real thing Missoula, and you know it!

Larry Lewis
Larry Lewis

For Sale?!! I thought Mayor McCheese said there were going to be great new businesses in there real soon. And whatever happened to all those green jobs he told us were materializing at the old Smurfit-Stone site? I'm beginning to think this guy has about as much handle on the truth as Barack Hussein Obama.

fulltilt
fulltilt

Jed Dennison is probably one of the worst real estate agents I've met. In my opinion, he is a contributing factor of the failure of the building to lease to tenants. He's just a horrible sales man. Good luck with the sale.

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