With high interest rates early in the year, Missoula’s commercial real estate marketplace was a bit sluggish in 2024.

The Industrial market in Missoula for manufacturing, distribution and logistics were in pull back mode during the year. However, there were significant land sales in the Bonner and Wye area that will be developed for future Industrial parks.

Retail remained stable primarily because Missoula is a regional hub for shopping. Reserve Street is Missoula’s “Retail America Street” with all the Big Box Stores (Costco, Lowe’s, REI, Home Depot, Target, Walmart, etc.). Downtown had some turnover of restaurants and shop space but remains a very desirable retail destination.

New office space options are not as plentiful since construction starts have become more dependent on tenant preleasing. Demand for office space has flattened due to remote and hybrid work trends. Some of the older buildings are turning into collaborative workspaces.

The City of Missoula is close to finalizing the future land use plan that will allow densification where current infrastructure exists, including water, sewer and roads. Congratulations to the City for enacting the camping ordinance; this is a big step, yet there are still issues to deal with for the unhoused.

The trend toward mixed-use residential commercial developments and eco-friendly buildings will be incorporated into building plans and designs. The Southgate Mall Redevelopment is in the works. The City has purchased land around Southgate Mall, which will be redeveloped for mixed-use purposes, primarily residential.

Investments from outside the region are growing in the multifamily and industrial markets, and new starts are anticipated this year. Lenders continue to tighten their underwriting criteria, and interest rates seem to be poised to drift slightly lower.

Other Wye development projects are in the works. Missoula Knife Company started a new manufacturing facility, and a new residential development project is poised to begin. The Amazon last mile delivery facility was opened at the end of 2023.

Missoula has experienced steady growth due to its desirable location in western Montana and diverse economy. The University of Montana, local and federal governments, major hospital facilities, a regional airport with many direct flights, being a transportation hub, new high-tech start-ups, recreation and outdoor opportunities, art museums, music venues, restaurants, the Missoula Symphony and entertainment options continue to make Missoula an attractive location of choice. The population is expected to grow to approximately 40,000 people by 2045.

Concerns about climate change will continue. Cyber security will continue to be a threat. Insurance rates

are expected to rise steadily. Ecommerce business will continue to provide opportunities in technology and distribution.