In commercial real estate, long-term value is driven by more than just square footage and cap rates. At its core, CRE value follows productivity—and productivity depends on people. That’s why understanding the economic pulse of a market like Missoula is essential for smart real estate decisions.
Employment trends, wages, and affordability influence the health of our local economy and real estate markets.
Employment Is Up—But There’s More to the Story
The headlines are encouraging: Missoula gained jobs in 2024, even as other markets slowed. That kind of growth speaks to the strength of the local economy.
But it’s not all smooth sailing when you dig into the details. Much of the job growth came from lower-paying jobs in hospitality and retail. At the same time, several major employers in higher-wage industries scaled back or shut down altogether. Pyramid Mountain Lumber closed its doors, OneSource ended operations, and Roseburg ceased production—each one representing significant losses in skilled manufacturing jobs.
Why does that matter? Not all job growth carries the same weight when it comes to supporting a city’s long-term economic health and commercial real estate performance.
Commercial real estate thrives when tenants are stable, businesses are growing, and workers can afford to live near their jobs.
A Wage-Cost Gap That’s Hard to Ignore
Missoula’s economic challenge is twofold:
- Average wages are ±10% lower than the national average
- The cost of living is ±7% higher, with housing as the biggest driver
This mismatch directly affects the commercial market:
- Retailers struggle to staff locations
- Manufacturers lose talent to more affordable metros
- Businesses face challenges in recruiting and retaining staff
Affordability isn’t just a housing problem—it’s a workforce and economic development issue, and it’s beginning to impact Missoula’s commercial real estate performance.
Housing Constraints Create CRE Constraints
When it becomes too difficult for workers to find housing, employers either have to raise wages or face turnover. Both outcomes increase operating costs, impacting business growth, space utilization, and lease negotiations.
This is a growing problem in Missoula. Since 2020, retailers have struggled to remain fully staffed, with many cutting hours or closing. In 2024, Missoula saw labor-related strain spread to the manufacturing sector, including a notable industrial closure where housing affordability was cited as a contributing factor.
More businesses are doing the math, finding that the viability of doing business in Missoula hinges on whether new housing can come online at the right price points for their workforce.
Growth Potential Is Real—If We Make Room for It
Despite the pressure points, Missoula remains an attractive location. In 2025, the Milken Institute ranked the city among the top 10 small metros in the U.S. for economic performance. The local labor market remains strong, with promising growth in tech and healthcare.
However, sustaining that momentum depends on access to housing and workspaces. If job creators can’t find facilities—or if their workers can’t find homes—they’ll go elsewhere.
Planning for the Long Game
Local leaders are aware of challenges related to housing and employment. Both the City and County of Missoula have taken steps to address long-term growth through the 2045 planning framework. The city’s recently adopted land use plan outlines where and how Missoula should grow, identifying areas for targeted development, infrastructure expansion, and zoning reform.
While policy shifts take time to ripple through the market, these efforts signal a commitment to tackling the root causes of affordability and economic strain. Understanding how these plans shape future development corridors is key for those in commercial real estate. It’s also a reminder that collaboration between public planning and private investment will shape what Missoula looks like 10, 20, or even 30 years from now.
SterlingCRE: Helping You Read the Signals
Missoula has a long track record of economic resilience. We’ve weathered national downturns, bounced back from the pandemic, and shown what’s possible when a community plans its future.
However, real estate professionals and investors must go beyond understanding comps and vacancy rates. Paying attention to employment shifts, wage trends, and migration patterns is key to understanding future demand for space—whether you’re developing multifamily, investing in industrial, or leasing office.
At SterlingCRE, we track the data behind the deals to help our clients stay a step ahead.
Let’s Talk Strategy
Understanding Missoula’s economic context is essential to create strategy for development, repositioning assets, or planning acquisitions.
Contact our team to explore how these trends might shape your next move—and how to get ahead of them.
