A well-appointed studio on the seventh floor of the Wilma Building in downtown Missoula went under contract three days after it was listed, never mind the asking price of $368,000.
The quick contract punctuates what the unit’s agent described as a hot downtown real estate market, one where the demand for residential units is high but the supply is limited.
“The vacancy rate is very, very low for buildings downtown,” said Matt Mellott, a commercial real estate agent for Berkshire Hathaway. “There’s certainly interest, it’s just a matter of affordability and parking, those sorts of things.”
Just before Mellott was scheduled to meet a client this week, he offered a quick tour of the studio perched high in the historic Wilma. The unit was listed as a fully furnished, turn-key condo with panoramic views.
The layout represents little more than a loft with a small kitchen and bathroom, and a living space large enough to accommodate a king-sized bed. But the asking price wasn’t a deterrent for those in the market.
“This one was owned by an investor who came in and did a nice job fixing it up,” Mellott said. “The Airbnb side of leasing it for a month, or a week, makes it very easy to get a premium on the return. If you return people more frequently, the rent you can charge is much higher, so it’s pretty attractive for that.”
While a handful of residents call the Wilma home, Mellott said most of the building’s units are rented out to visitors in an Airbnb-style arrangement. Prospective buyers ask about potential noise from the concert hall on the first floor, as well as the building’s history.
But the views and potential value as a vacation rental are what get buyers talking. From this particular unit, the Missoula Valley stretches long to the south and the Clark Fork River and Caras Park sit below.
“A lot of people from out of town have called about this–people from Seattle and Vancouver,” Mellott said. “I don’t know if they know some of the history of the building, or if it’s just because of the views and the proximity to downtown, but there’s been a significant amount of interest in the units.”
Over the past year, Mellott said, two other units in the Wilma have sold. The prices have ranged from roughly $270,000 for a studio to $695,000 for a three-bedroom unit.
Mellott admits the prices are steep, though they haven’t deterred qualified buyers. The south-facing views from this particular unit on the seventh floor add a value of roughly $100,000, Mellott said.
“Downtown living is sparse as it is, and it’s not very often a unit in the Wilma goes on the market,” he said. “There’s plenty of stuff coming online downtown, but they’re half-a-million-dollar condos and there’s only so many people who can afford those. If you can find ways to build more units–affordable units–I think they’d get filled up either to rent or to buy.”
Linda McCarthy, executive director of the Missoula Downtown Association, said the demand for downtown living is high. It reflects a global trend where people are looking to move back to the urban core, forgoing stressful commutes in exchange for living near services, jobs and amenities.
“Locally, our downtown is pretty hip and people want to be here,” McCarthy said. “They like what’s happening with the activity and diversity. There’s definitely a local demand, just as there’s a global demand.”
The need for downtown living isn’t new, but rather it’s a trend that emerged nearly a decade ago. The city’s Downtown Master Plan, released in 2008, identified the need for 3,000 new housing units in the downtown district over the next 20 years.
Ten years into the plan, McCarthy said, roughly half of those units have been proposed, opened or are under construction, including Toole Crossing and the Old Sawmill District, which saw its first residential unit open earlier this year.
A student housing project is under construction on Front Street, and the redevelopment of the Riverfront Triangle is expected to begin next year. That project includes a mix of workforce housing and high-end condos. The number of units has not yet been specified, though the project is expected to put a dent in the city’s lack of downtown residential opportunities.
“When you have people living downtown, they’re here 24-7,” McCarthy said. “It’s how you move beyond that 8- or 12-hour market. It brings ownership to the district, so they take a more vested interest in what’s happening. It has a higher economic impact because your residents are your primary consumers.”
Many of the new or existing units downtown aren’t necessarily affordable to most Missoula residents. The condos in the Old Sawmilll District list for more than $300,000 and units in the Wilma are fetching a similar price.
The city has embarked on several initiatives to close the gap between local wages and the cost of living, including the creation of a new housing office. The Missoula Organization of Realtors is planning to launch a housing assessment, and the Missoula Economic Partnership will do the same with a workforce analysis.
“We have a couple initiatives under way to understand why that gap is there and identify a potential solution,” McCarthy said. “Downtown has a capacity for more housing, and housing should be looked at across all levels, from high-end to market rate to low income.”
While the cost of living in downtown Missoula remains high and beyond the reach of most Missoulians, selling downtown housing units isn’t hard. The seventh-floor unit in the Wilma sold in three days.
“In the Wilma specifically, because it’s so historically significant, they’re higher-end units and maybe not the most affordable things for your average person looking for a place to stay,” Mellott said. “But if you just make it easy for buyers, you can walk into this particular unit and it’s sold.”
This article originally appeared on Missoula Current, an independent online newspaper, of which Martin Kidston is the founding editor.