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Brian Walker walks through the weeds covering some of the half-acre lot on Hickory Street where he plans to build a 25-unit apartment complex. Walker says building lots close to the downtown are rare and in high demand by developers and potential buyers and renters.

The demand for high-density housing near Missoula’s urban core appears to be insatiable, and that dynamic is rapidly changing the city’s neighborhoods. One new project called Hickory Heights near McCormick Park is a perfect example of how developers are racing to keep up.

By the end of the year, a local developer is going to start the process of constructing a three-story, 25-unit apartment complex at 201 Hickory St. It will have a rooftop terrace, an enclosed glass atrium and below-grade parking and storage. The building will take up a half-acre of land, replacing a rundown duplex currently on the site.

Brian Walker of Envision Commercial Construction in Missoula said it’s taken more than a year of planning but he’s finally ready to start demolition on the site this year. The project will actually consist of a 19-plex and a six-plex right next to each other, with big penthouse units on the upper levels looking north toward the Clark Fork River.

Walker, a Missoula native and University of Montana graduate, has built several other large projects in Missoula over the years, including a large housing development across from the Good Food Store. He said it’s getting harder and harder for developers to find suitable buildable lots for the ever-increasing demand for housing.

“I’d say it’s a daily battle,” he said. “Real estate is a tough business right now. A little bit of that is zoning. We got more favorable zoning when the city adopted Title 20 in 2009, which definitely helped. We are somewhat limited in zones.” 

Title 20 is the abbreviated name of Missoula’s zoning ordinance. The City Council revised zoning laws in 2009 after an extensive review.

He was thrilled to find a lot so close to the Kim Williams Trail and McCormick Park so that potential tenants can walk downtown or to the university or the ballpark.

“That’s really where everybody is pushing toward now, is trying to fill in the core of the city,” he explained. “There was success in the Sawmill District, and so there’s a big push to get everything centralized close to downtown. There’s a lot of older structures getting torn down, but we don’t have a whole lot of real estate left. That’s pushing us into developing anything we can get.”

When deciding whether to sell the project as a group of condominiums or rent out apartments, developers face a gamble either way. However, Walker decided that high-end apartments in that location would find a great market. He believes that “snow birds,” retirees and others who live in Montana for the warm months but head south for the winter, could be his main clientele.

“This will be in the upper-end rental market, and it will be attractive to people who want to experience downtown and the ballpark,” he said. “We’ll have a lot of additional storage so people can store their kayaks and winter gear and get out and recreate. We’ll have a lot of outdoor living space with a gigantic rooftop patio, but we’ll have an enclosed glass atrium where you can still get sunlight in the colder months. We’ll have an indoor gym to accommodate the active lifestyle.”

He pointed to the success of the Sawmill District and the upcoming Riverfront Triangle development as signs that high-end new development is still in high demand here. There is also a large apartment complex going up near the Carmike Cinema movie theater on Reserve Street called Halling Farms that is expected to absorb hundreds of renters.

Walker said Missoula experienced a boom in housing construction starting in 2003, but it dropped off starting in 2006 and stagnated until about 2011. Then things started picking up again, and it seems like developers are making up lost time now.

“You do the math, and this town needs more housing every year,” he said. “Missoula’s population is growing at about 2 percent every year. Even if it’s slower than that, like 1.5 percent, that’s still 1,500 people every year that need someplace to live. All those years during the recession when a lot of housing wasn’t getting built, now we’re catching up to fill that gap.”

His company actually has three other six-plex projects under construction right now, including an affordable housing apartment building near the Kim Williams Trail not far away.

“We did a bigger project off Third Street last year, right next to AutoZone, but that was just bum luck,” he said. “We just happened to catch it on the MLS. We are running out of bigger tracts of land and even smaller tracts.”

For developers, that means they sometimes have to buy lots that already have houses on them. That means that not only do they pay more up front for the lot, but they also have to pay to demolish the existing structure. That’s what happened in the case of the Hickory Street project.

Walker said that before the recession, developers were paying four times less than what they’re paying now for buildable lots.

“When I first started, we were paying $4,000 to $5,000 per door,” he said, referring to the total cost of the land divided by the number of units he can build. “Now we’re paying $20,000 per door and I’ve seen it as high as $30,000 per door. Hickory Street was right at $26,000 per door.”

In the end, that means the costs will have to be shouldered by the eventual tenants or the buyers, because the developer has to make the project pencil out.

“A lot of structures that are 60-plus (years old) are getting torn down,” Walker said. “We don’t have a whole lot of real estate left. It’s pretty tight.”

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