UPDATE: This story was written prior to news breaking that Kohl’s Department store, along with PetSmart pet supply store, were no longer planning to open in Kalispell. Read coverage of the Kohl’s decision here. The original construction story is posted below.
Don’t expect a sudden return to the building boom that occurred earlier in the decade, but get ready for the renewed hum of swinging hammers and rumbling bulldozers in Kalispell starting this spring.
After a dormant year in which Kalispell City Planning Director Tom Jentz said there was “basically nothing” in terms of commercial building, a number of large projects are expected to break ground in the spring and summer. The 186,000-square-foot Super Wal-Mart and 50,000-square-foot Kohl’s on Kalispell’s north side top the list, Jentz said.
Meanwhile, new residential construction will continue to be sluggish throughout the valley and state, though evidence of an invigorated remodel market is encouraging for both builders and officials in industries such as wood products. Plum Creek Timber Co. recently restarted its sawmill in Columbia Falls, citing increased demand for its pine boards, which are popular in touchup construction projects.
Within the last 10 years, cities like Kalispell and Bozeman have sprouted up entire new shopping districts replete with large box stores. For years leading up to 2008, Jentz said Kalispell was averaging at least 300,000 square feet of new retail and office space per year. But last year, a new Sizzler restaurant north of town was the only notable commercial addition. Jentz said this year the city will once again reach its previous annual average.
“Not a flush year, but a good year,” Jentz said
In addition to Wal-Mart and Kohl’s, Jentz points to a number of other big building projects coming up this spring and summer in Kalispell: the Hilton Homewood Suites, a four-story hotel in Hutton Ranch; the Montana Club moving into the Sawbuck’s location; the county’s new consolidated 911 center; and, if approved, a prerelease center.
Also, a multi-million dollar remodel of the long-abandoned Tidyman’s building downtown is underway. It will be the home of a Super 1 grocery store.
While Kalispell’s commercial sector is set to receive a boost, Cary Hegreberg of the Montana Contractors’ Association said the state for the most part is still in a building lull. Aside from scattered projects in a couple cities, there’s not much significant commercial activity on the horizon, Hegreberg said – certainly nothing like earlier in the decade.
Also, he added, there was a time within the past decade when it seemed “about every community in the state had big hospital projects.” But those multi-million dollar projects have largely dried up as well, along with the major remodels and additions at colleges.
“A lot of that is wrapping up,” Hegreberg said. “We’re anxious to get back to work.”
Hegreberg said the main lifeline for contractors in Montana right now is the public works sector, with work to be found on projects such as water and sewer systems. He said these types of jobs are receiving three times as many bids as in past years. But Hegreberg is excited about the federal stimulus bill. As early as this month and into April, bid letting will begin on a couple of major highway projects.
That won’t necessarily do much for the private investment side, but Hegreberg said a few big stimulus-related projects couldn’t come at a better time right now for his industry.
“This spring and summer we should start to see some actual activity – and it’s encouraging,” Hebreberg said. “Right now it’s the public works projects that are keeping people going.”
The residential sector, however, remains in doubt. Jentz said traditionally – at least in this region – a strong commercial building season has invariably prompted a strong residential push. Calling the Flathead “a move-in community,” Jentz said people who are contemplating relocating here look for signs of vibrancy and growth, like the emergence of new shopping centers. This spurs the residential sector.
But given that today’s volatile economic conditions don’t fit into the traditional model, Jentz isn’t sure if the residential-follows-commercial trend will hold true this time around.
“We’re not following normal patterns right now,” Jentz said. “It’s an anomaly.”
Furthermore, Hegreberg said it’s unlikely that housing starts will pick up until the current glut of houses on the market is diminished. But after a slow 2008, home sales are still slow through the first months of this year.
According to figures from Jim Kelley of Kalispell’s Kelley Appraisal, there were 984 overall residential sales last year, compared to 1,789 in 2005. For the months of January and February, 75 were sold this year, as opposed to 167 in 2005.
So cities, in need of building permit revenues, and builders, in need of jobs, will often have to rely on residential remodels, much like last year. Dustin Stewart, executive director of the Montana Building Industry Association, said people who own homes with depreciated value are choosing to spruce up their homes and add value while the market is down.
“They remodel to the point they’re comfortable with the surroundings and then look to put it on the market down the road,” Stewart said.
In Whitefish, Planning Director Dave Taylor said the city is coming off a record year for remodel building permits. But bigger residential projects – new single-family residencies, duplexes and apartments – lagged considerably behind previous years. The planning department issued 35 new residential permits last year, compared to 292 in 2005.
“There’s no permits coming through the door,” Taylor said.
Taylor expects the trends in the residential sector to continue this year, which puts his department in a pinch because of low permit revenues. Earlier this month, the department announced it was forced to lay off Mike Howke, who had worked as a building inspector for the city for nine years.
Now Taylor and his staff are looking into other ways to cut money, such as moving its offices to a location with a cheaper lease, getting a loan from the general fund or, worse-case scenario, shedding more jobs.
“There might be more (layoffs) on the horizon,” Taylor said.
Kalispell’s residential sector should be slow as well, similar to last year. This is especially true for single-family residences, Jentz said. There are actually signs of life for larger, multi-family dwellings. A 65-unit apartment complex on North Meridian Street is expected to break ground this spring, Jentz said, along with possibly another sizeable complex on Appleway Drive.
Multi-family residences, like the apartment complex in Kalispell, are where builders can expect to see the most activity in residential construction, Stewart said. Yet, even with optimism in that sector, Stewart said it’s a matter of wait and see before builders will know what happens to the overall market – and economy.
“Phones are starting to ring a little bit, potential customers are calling and they’re interested,” Stewart said. “But they’re still sitting on the fence.”