From new housing to new businesses to new public institutions, construction continued at a feverish pace in the Garden City last year.
The financial value of development in Missoula dipped slightly in 2018 compared to the last two record-breaking years, but it was still one of the more active 12-month periods in the city’s history.
The total market value of construction permitted in Missoula last year was $223.6 million, a 19 percent drop from the record $277 million in 2017.
As has been the case for the past few years, taxpayer-financed projects made up a huge chunk of the development. The new Missoula Public Library was by far the largest single project approved last year, worth $28 million. The total market value of construction for projects doesn’t include things like land costs or architectural fees.
The Sentinel High School remodel and addition, worth $14.7 million, was the second largest project. A new Stockman Bank building on Brooks Street was worth $13.4 million, and three new Ault Mullan apartment buildings were worth $8.7 million.
Mike Haynes, the director of the city’s development services office, said housing construction played a key role.
“Building permits issued for one and two-family residential units increased for the sixth year in a row to 282 in 2018,” Haynes noted.
However, according to Haynes, the total number of residential units permitted in 2018 (including multifamily units) dropped to 463 units. That’s the lowest level since 2015.
Much of the development in Missoula last year was on facilities that will be open to the public, including a new Montana Rail Link park near Southgate Mall as well as the new Commercial and Culinary Arts buildings at the Missoula County Fairgrounds, which are in the midst of a historical remodel and upgrade.
The Meadow Hill Middle School remodel and addition was worth $8.3 million, and the Lewis and Clark Elementary School remodel and addition was worth $4 million. All school renovations are being paid for by the $158 million Smart Schools 2020 bonds approved by voters in the city and county in 2015.
The Albertons grocery store expansion on East Broadway was worth $4 million, the new 35-unit Crestmont Apartments were worth $3.1 million, the DoubleTree Hotel remodel was worth $3 million and the remodel of the Florence Building’s upper floors was worth $3 million.
Economists are predicting robust growth in Missoula over the next few years.
Paul Polzin, the director emeritus of the Bureau of Business and Economic Research at the University of Montana, gave a local economic outlook summary last week to a crowd in Missoula. He noted that the Missoula area is the second-most populous urban center in the state, behind Billings, but the Bozeman area is quickly catching up.
Polzin said the BBER believes between 2019 and 2022, Missoula's non-farm earnings will increase by an average of 2.7 percent every year. That's third in the state behind the projected 4.1 percent growth for Bozeman and 3.3 percent growth projected for the Kalispell area.
State and federal government jobs have been one of the most important drivers of Missoula’s economy in the last decade.
“Between 2012 and 2017, basic labor income (in Missoula) increased by $145 million, and about $17 million of that was in state government,” Polzin said. “We can’t distinguish between the University of Montana and other state jobs, but I would anticipate that the University of Montana was stable, maybe declining, and this growth was in other state workers.
"And labor income of federal government workers increased by $13 million in that same time, again representing Missoula’s role as a service center.”
The wood products industry added $21 million in labor income during that time period.
Todd Morgan, the BBER’s forestry industry expert, said that 2012 was a low period in Montana’s wood products industry, and by 2017 existing plants had added shifts and added hours.
The largest increase in labor income in Missoula was in retail and wholesale trade, an industry that added $27 million in labor income in that time period.
“This is really good news,” Polzin said. “Because retail trade has been suffering in other parts of the country and other parts of Montana.”
The economic boost of manufacturing businesses at the former Bonner Mill site east of Missoula was huge, Polzin added.
When just looking at 2015, 2016 and 2017, the health care industry was the largest contributor to income growth in the Missoula area, followed by retail trade, construction, professional services, finance and insurance.
“Again, that represents Missoula’s role as a regional service center,” he said. “You can see the acceleration of Missoula’s economy in the last several years.”
Polzin told the crowd the outlook is rosy for Missoula’s economy in the next few years, provided unexpected worldwide events don’t put a wrench in the gears.
The projected non-farm earnings increase of 2.7 percent for the next three years would be higher than the 2.5 percent increase seen in 2018 but lower than the 3.6 percent increase seen in 2017.