One thing is for sure: the Mullan & Reserve area of Missoula will look very different in the coming years. What, exactly, it will look like is being shaped right now through a virtual charrette and town planning process facilitated by Dover Kohl Partners. The future vision evolving right now looks like a dense, new urbanist inspired setting that integrates nature, agriculture, single family housing, apartments, office space and your favorite breweries and restaurants. The future for the Mullan Area looks very bright indeed.
That said, this type of intense commercial development called for in the plan requires an experienced development team to pull off. Timing, financing and design for a master plan of this magnitude is much more complex than the single use development that we typically see in Missoula. However with correct execution, these types of communities can create strong returns for investors while at the same time providing a high-quality, community-focused environment.
The Mullan & Reserve Area and Infrastructure
One of the largest areas of undeveloped land in Missoula has been dubbed the Mullan Area. Included is 1,800 acres roughly bounded by West Broadway, Reserve Street, Mullan Road and the airport. In 2019, the city received a major federal grant of $13 million. The goal of the BUILD grant is to enhance the traffic flow and transportation network to relieve some of the congestion on North Reserve Street as urban sprawl continues. At this time, the city is deciding which transportation projects to fund. As a result, they have started the Mullan Area Master Plan project to develop a vision for the area which will help better plan infrastructure for future needs.
For investors, staying aware of infrastructure investment is critical. While the impact on value can vary greatly due do a variety of conditions, investments into infrastructure, public transit, mixed use zoning, parks, open space and pedestrian friendly street design tend to cause higher price appreciation.
Beyond the impact on land values, infrastructure investment often shapes where commerce happens in our cities. Decisions related to infrastructure can impact non-adjacent areas, too. Perhaps the best example of this is the constant shifting of jobs between downtown office buildings and suburban office parks. During the 70’s and 80’s cities invested in interstates and outer belts, leaving urban infrastructure projects largely ignored, with office jobs moving into suburban office parks. In the 2000’s, many cities began to reinvest in their downtowns and public transit focused on connecting suburbs to downtowns, thus moving jobs back to center cities.
Infrastructure + Long Range Thinking Drives Growth
Infrastructure drives growth and real estate development. New and expanded roadways increase the intensity of use that an area can support. Connecting neighborhoods through roads, transit and greenways prepares new market areas for commercial development including mixed use projects and retail centers. Municipal infrastructure such as water and sewer lines allow for denser, more efficient development. Incorporating parks and open space make areas more much more appealing for residential uses.
In contrast, areas that do not have infrastructure investments are not able to support intensive use and are generally less desirable for development.
An undeniable, long term trend across America is that population growth is occurring mostly in suburbanized settings. But, the density of new suburban development is greater than the typical subdivision you remember from childhood and less dense than traditional urban settings. John Burns Real Estate Consulting has dubbed this new paradigm “Surban” development. By intelligently planning these surban settings now, we can greatly improve the quality of life for people living in these more dense areas than perhaps was common in the past.
Why does all of this matter to a real estate investor? Because knowledge is power, and the right knowledge is often profitable. Knowing where future infrastructure is going helps investors make wise real estate investment and development decisions.
What is Being Considered in the Mullan Area?
Dover, Kohl & Partners has been hired by the city of Missoula to shape the master plan of the Mullan & Reserve area. At the end of March, they completed a virtual charrette and synthesized feedback from the community to create a draft plan. The plan focuses on providing a variety of housing types on the interior, integrating parks, open space and agriculture into the area. There are also areas of higher density housing and commercial space, creating mixed use communities. These are focused along West Broadway and Mullan Road.
The density of the plan is of note–15 residential units per acre–with much of the development being focused on forms of vertical mixed use buildings that incorporate ground floor retail, middle-floor office and residential on top. There is also a recommendation to incorporate live-work style units.
This style of new urbanism is popular around the country, creating desirable communities that allow for walkable lifestyles. Additionally, Dover Kohl is suggesting bus rapid transit links to Downtown Missoula.
It is important to note that this is a work in progress and public input is still being considered. If you have ideas or suggestions for this area– now is the time to get involved.
What Does This Plan Mean For Commercial Real Estate Opportunities?
At this point, the plan is still in draft form. The next steps are to refine that vision through continued feedback from residents, city officials and the design and building industries. At the conclusion of this process, recommendations will be made by Dover Kohl to guide infrastructure investment in the future. After that, policy will be implemented such as zoning requirements to create the regulatory framework to help guide development. Then, new projects will begin as the market allows. Though much of the land is slated for residential use, there are many opportunities for commercial development and investment.
One notable feature of the plan is the emphasis on vertical mixed use. Mixed use development — done right — is highly marketable to both residential and commercial uses. After all, who wouldn’t like to work upstairs from a coffee shop, or within walking distance of good restaurants and breweries?
That said, the type of mixed use being illustrated in this plan can be complicated to build. Apartments can be fully leased up while ground floor retail sits vacant. A bank may be willing to lend on the office component of a project, but not the retail. Living above a hot, new restaurant may be a dream until mid June when the dumpster starts to smell and tenants start to complain. Shared parking can also be a challenge. While structured parking offers a solution, it will no doubt add to the expense of a project.
Mixed use projects often look amazing in an illustration but can be a challenge to execute well. However, careful attention to design details, realistic pro-formas and development timelines and working with professionals experienced in mixed use development can help make these types of projects go much more smoothly. There are great opportunities to be had by creating spaces people love.
A Bump in Demand
Investment in planning and infrastructure can often cause property prices to increase in the impacted area. Often times, prices may rise beyond what the current (and future) development potential supports. This creates, in effect, a land rush. It can be tempting for people to overpay to get into an area with great potential. Careful assessment of project timeframes, the competitive market and overall feasibility is necessary to avoid overpaying for land. Large new urbanist style communities can often require an extended time frame to reach their full potential. This is particularly true for commercial development which may require residential uses to be nearly completely built out in order to support them.
The plans envisioned for the Mullan & Reserve Area show promise in creating a very livable and attractive community. Consideration for the natural environment while also allowing for denser residential centers will create a place people desire to live. This style of development has seen success across the country and residents will often pay a premium to live in such a community.
Missoula is still in the process of creating this plan. Visit the website at https://www.mullanareamasterplan.com/ to see what is envisioned and to provide your feedback.
They are off to a strong start and we are excited to see the end product, both on paper and on the ground.
For your next commercial or apartment investment project in Missoula, Kalispell or Bozeman, you’re invited to contact one of our advisors here.