Montana's economic profile has been on a positive trajectory in recent years. The state posted the fifth-fastest economic growth in the country since 2021, with real GDP up 16.1% compared to the national average of 10.8%. Wage growth ranks third nationally. Business applications hit a record in May, with more than 7,500 filed in a single month. WalletHub placed Montana 12th on its 2026 list of best states to start a business.
Missoula is where a lot of that growth is happening. The city added 718 residents between 2024 and 2025, the largest gain of any Montana city, pushing the population to roughly 79,000. Billings, Montana’s largest city, lost residents over the same stretch.
Plenty of locals aren’t thrilled about the growth and it's strain on affordability, especially as it pertains to housing. Fair point. But the growth is coming either way and added supply is the only way to slow escalating housing prices. The real question is whether Missoula can build fast enough to keep up. And whether it can pay for that growth without pricing out the people already here.
The bottleneck has always been infrastructure.
You can’t put housing or commercial space on land you can’t service. Roads, water, sewer, and fire suppression come first. In Montana, they’re expensive to fund. The state has no broad-based sales tax and no coherent state-level infrastructure mechanism, so the cost falls largely on property owners and on tax increment financing.
That constraint has shaped our market. SterlingCRE Advisors’ recent multifamily research shows why downtown construction lagged for years: the cost to build downtown-style housing never matched the rents the market would support. Missoula stays supply-constrained because geography, permitting timelines, and infrastructure limits make it hard to build quickly.
The Our Missoula 2045 plan estimates the city needs 1,100 to 1,500 new housing units a year for the next decade to close the deficit and meet new demand. That’s a tall order for a market that has struggled to get shovels in the ground.
Missoula spent the last year building the means to pay for growth.
Here’s what changed, and why it matters for anyone who owns, leases, or invests in commercial property here. In recent years, the city and county have worked to assemble the financing and zoning tools to help increase supply.
Missoula County adopted a Workforce Housing Policy that allows tax increment to fund infrastructure for attainable housing projects, with guardrails that keep the dollars out of luxury home projects. The county bought the new Wye water system for $5.7 million through a Targeted Economic Development District, staging an area that could eventually hold up to 15,000 homes. At Grant Creek Crossing, the county committed up to $7.9 million in tax increment to reimburse for infrastructure costs for a 200-unit project, with the developer bearing the risk until the increment materializes.
Downtown, the city closed the long-stalled Riverfront Triangle sale to Averill Hospitality for $4 million on a 2.0 acre parcel. That roughly $100 million project is expected to put $7 million into the Affordable Housing Trust Fund over time. The city also approved Midtown Commons, a $100 million mixed-use development that will deliver up to 250 units, with condos priced near $350,000, below the market median.
Missoula’s new unified development code legalizes apartments in 89% of residential and mixed-use land, up from a prior code that restricted 64% of residential areas to single-family homes or duplexes. The council also dropped parking minimums.
These projects and policy changes share a focus on attainability. The tax increment carries guardrails and workforce and below-median housing is prioritized.
No single policy change solves the supply problem. Together, they change what's possible to build, where, and for whom. And credit where it's due: the city and county have moved to break the bottlenecks they control, from funding tools to a rewritten zoning code. The harder holdups now sit upstream, at the state level. Permitting through agencies like the Department of Environmental Quality, the Department of Natural Resources and Conservation, and the Montana Department of Transportation can add months or years to a project, and those delays hit attainable housing hardest, where the margins are already thin. Infrastructure funding remains piecemeal on top of that. There's still real room to improve. But the local direction is right, and that hasn't always been the case.
What it means for commercial real estate
A supply-constrained market that’s clearing its infrastructure and zoning bottlenecks is a different investment case than one that’s simply tight.
Our multifamily research points in the same direction. Vacancy sits at 5.01%, a level at which landlords lease up without trouble, and renters still have options. Rents are tracking inflation rather than getting undercut by a flood of new product. In a market where supply is hard to add, the assets that hold value are the ones where rents keep pace. Missoula fits that description, and the constraints that protect those assets aren’t going away soon.
The tools to fund growth and the zoning to allow it are arriving just as the project pipeline fills. Owners with capital, businesses weighing a move, and investors looking at the next cycle have a clearer picture on where Missoula is heading than they’ve had in years.
While growth in Missoula has long been inevitable, what truly matters, and what is now changing, is the city’s capacity and commitment to build infrastructure and housing to meet that demand. This shift is worth close attention.
SterlingCRE Advisors tracks these trends across Missoula and Montana’s other key markets. Contact us to talk through what they mean for your property or portfolio, or sign up for market reports.
