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.