HomeMy WebLinkAbout23- Bozeman 2023Q2 Market UpdateEconomic & Planning Systems, Inc.
The Economics of Land Use
Prepared by:Prepared for:
City of Bozeman, MT Economic Development Department
Report
Bozeman
2023 Economic
and Market Update
October 2023 EPS #233070
ii Bozeman 2023 Economic and Market Update
Table of Contents
2
3
4
1 City Snapshot and Summary 1
City Snapshot 1
Economy 7
Economic Trends 7
Wages 10
Economic Drivers 12
Commercial Real Estate 13
Office Market Trends 13
Industrial/Flex Market 17
Retail Market 20
Housing 25
Construction 25
Housing Prices 26
Apartment Market 27
Affordability 30
Housing Demand 32
Economic & Planning Systems, Inc iii
Table of Contents
TablesFiguresTable 1 Population and Housing Units, 2010-2023 2
Table 2 MSU Enrollment, 2001-2022 3
Table 3 Peer City Summary 6
Table 4 Job and Wage Growth, Top Sectors, Gallatin County, 2017-2022 10
Table 5 Changes in Jobs and Wages for Key Sectors, Gallatin County, 2019-2022 10
Table 6 Population 25+ by Educational Attainment, Bozeman, 2022 12
Table 7 Office Summary , 2010-2023 Q2 14
Table 8 Recent Office Development, Bozeman 15
Table 9 Industrial Summary, Gallatin County, 2010-2021 17
Table 10 Recent Industrial/Flex Projects, Bozeman 18
Table 11 Retail Summary, 2010-2023 Q2 20
Table 12 Recent Retail Projects, Bozeman 21
Table 13 Bozeman Building Permit Unit Trends 25
Table 14 Home Price Trends, 2016-2023 Q2 26
Table 15 Multifamily Summary, 2010-2023 Q2 27
Table 16 Recent Multifamily Development, Bozeman 29
Table 17 Required Annual Income to Afford Median Home Price, 2016-2023 30
Table 18 Bozeman Housing Demand Projection 32
Table 19 Bozeman Housing Unit Projection 32
Figure 1 Gallatin Valley Region 2
Figure 2 Private Wage and Salary Employment, Bozeman and Gallatin County, 2022 7
Figure 3 Private Employment Growth, Bozeman and Gallatin County, 2017-2022 8
Figure 4 Annual Change in Private Employment, 2017-2022 8
Figure 5 Unemployment Rate, 2010-2023 9
Figure 6 Change in Employment by Wage Quartile, Gallatin County, 2017-2022 11
Figure 7 Office Deliveries, 2010-2023 Q2 14
Figure 8 Industrial Deliveries, 2010-2023 Q2 18
Figure 9 Retail Deliveries, 2010-2023 Q2 21
Figure 10 Multifamily Deliveries, 2010-2023 Q2 28
Figure 11 Income Gap to Afford Median Priced Home, Bozeman, 2016 31
Figure 12 Income Gap to Afford Median Priced Home, Bozeman, 2023 31
This report provides an overview of the City of Bozeman and Gallatin County, Montana
economy, key growth trends, commercial real estate trends, and the housing
market and housing demand The intended audiences are economic developers, real
estate developers and investors, lenders, and policymakers The purpose is to provide
information on growth trends by area, economic growth by industry, wages, and housing
demand and affordability to help the community track trends, progress, and potential
threats This 2023 report is part of a series of annual updates to track market conditions in
the city and county
City Snapshot
Bozeman, situated within Gallatin County (pop 128,966), has a population of roughly
59,000 residents (Table 1) Bozeman stands out with a diverse economy, a highly educated
workforce, and exceptional quality of life—a combination not often found in small cities
Montana State University (MSU) is an anchor in the community and a strong research
institution with almost 17,000 enrolled students and 4,200 faculty and staff The area has
excellent access to year-round outdoor recreation activities and uncrowded spaces The
combination of these factors has supported strong job and wage growth and demand for
housing One of the most pressing issues for the City and greater Bozeman is increasing
the housing supply as the median home price is currently $767,500 up from $755,000 in
2022
Bozeman is one of
the fastest growing
cities in the U S
Between 2010
and 2023, the City
added an estimated
22,400 residents,
which translates to
a growth rate of 1,721
new residents per
year or an annual
growth rate of 3 8
percent (Table 1)
Bozeman has also
added an average of
1,100 housing units
annually since 2018
1. City Snapshot and Summary
Economic & Planning Systems, Inc 1
Table 1. Population and Housing Units, 2010-2023
2010-2023
Description 2010 2015 2020 2023 Total Ann. #Ann. %
Population
Bozeman 36,440 40,319 53,293 58,814 22,374 1,721 3.8%
Belgrade 7,281 7,738 10,460 11, 314 4,033 310 3.4%
Manhattan 1,396 1,191 2,086 2,167 771 59 3.4%
Other/Uninc.44,541 51,491 53,121 56,671 12,130 933 1.9%
Gallatin County 89,658 100,739 118,960 128,966 39,308 3,024 2.8%
Bozeman % of County Pop.40.6%40.0%44.8%45.6%56.9%
Housing Units
Bozeman 16,761 18,293 23,535 26,189 9,428 725 3.5%
Belgrade 3,154 3,308 4,339 4,714 1,560 120 3.1%
Manhattan 574 653 872 914 340 26 3.6%
Other/Uninc.20,841 23,715 24,089 25,678 4,837 372 1.6%
Gallatin County 41,330 45,969 52,835 57,495 16,165 1,243 2.6%
Bozeman % of County (HU)40.6%39.8%44.5%45.6%58.3%
Source: US Census; ESRI Business Analyst; Economic & Planning Systems
Most of the county’s population is within the Gallatin Valley, which is the area comprised
of Manhattan, Belgrade, Bozeman (I-90 Corridor), and Four Corners and Gallatin Gateway
(both unincorporated) The most urbanized area of the county is the “Triangle” area that
includes Belgrade, Bozeman, and Four Corners (Figure 1)
Figure 1. Gallatin Valley Region
2 Bozeman 2023 Economic and Market Update
The Bozeman economy has eight key segments that distinguish it from other mid-sized
cities and recreation or resort-oriented mountain communities:
•Higher Education – In 2022, Montana State University (MSU) had 16,688 students
enrolled and 4,250 faculty and staff MSU is one of 131 R1 research institutions with
“very high research activity” within the Carnegie Classification of Institutions of Higher
Education (Indiana University)
Table 2. MSU Enrollment, 2001-2022
2001-2022
Enrollment Trends 2001 2010 2015 2020 2021 2022 Total Ann. %
Undergraduate 10,538 11, 579 13,707 14,240 14,668 14,631 4,093 1.6%
Graduate 1,208 1,986 1,981 2,009 2,173 2,057 849 2.6%
Total 11,746 13,565 15,688 16,249 16,841 16,688 4,942 1.7%
Source: Montana State University; Economic & Planning Systems
•Tourism and Recreation – Bozeman is a “gateway community” for world class
recreation including the Bridger Bowl and Big Sky ski areas, pristine rivers and streams,
and Yellowstone and Glacier National Parks Bozeman Yellowstone International
Airport (BZN) is a major tourism (and business) driver with over 2 2 million passengers
in 2022 Many of the 1 6 million visitors entering Yellowstone National Park at West
Yellowstone pass through BZN and Bozeman, making this region an international
destination During the busy seasons, one can hear several foreign languages spoken
on the streets and in restaurants in Bozeman
•Health Care – Bozeman Health is a regional hub for health care in Southwest Montana,
employing over 1,000 people There are numerous other clinics and medical offices
clustered around the hospital and located throughout Bozeman
•Technology – Bozeman is a hub for technology and research and development
companies that have both started in or moved to Montana Major employers
range from companies focusing on software development to photonics R&D and
manufacturing Photonics and optical technology are an important technological
cluster, as are technology firms such as Oracle, Workiva, Aurora, Hyundai, Zoot
Enterprises, and numerous startups The new MonArk Quantum Foundry, a
partnership between MSU and the University of Arkansas, is advancing quantum
technologies (using the quantum states of subatomic particles in computing) It is
funded with more than $20 million in grants through a program designed to make the
United States a leader in the next quantum revolution as part of the National Science
Foundation’s “10 Big Ideas”
•Manufacturing – There are numerous manufacturing firms in Greater Bozeman
ranging from outdoor companies (Simms Fishing, Mystery Ranch) to optical
technology, materials science, electronics, and aerospace, and even a Gibson Guitar
factory
Economic & Planning Systems, Inc 3
•Retail and Hospitality – Bozeman retailers serve at least a 50-mile radius trade area,
making it the premier retail, services, and health care hub in Southwest Montana
Downtown Bozeman is a vibrant main street with independent shops, restaurants, and
breweries serving locals and visitors
•Creative Arts – The City has many businesses that provide goods and services based
on intellectual property and individual creativity These businesses include publishing,
film, TV, media, design, technology, performing arts, and museums and galleries
•Montana State University Innovation Campus – The MSUIC hosts the only SCIF
(Secure Compartmental Information Facility) in the State of Montana and facilitates
classified research for both government agencies and the private sector
BZN Airport
In 2022, Bozeman Yellowstone International Airport (BZN) handled a record-breaking
2,264,424 passengers, marking a 16 7% increase from the previous year’s record of
1,940,191 BZN served as the choice for over 40% of air travelers to or from Montana in 2022,
solidifying its role as a crucial transportation hub in the state
BZN also supports the tourism and recreation economy of the region, including
numerous guide services and Big Sky and Bridger Bowl ski areas BZN has direct flights to
numerous metropolitan areas
4 Bozeman 2023 Economic and Market Update
Comparison Cities
In Table 3, Bozeman is compared to several other western cities with similar
characteristics including Missoula, MT; Fort Collins, CO; Boulder, CO; Bend, OR; and
Billings, MT Bozeman is a young city with a median age of 28 2 Like Boulder and Fort
Collins, the age is influenced by the presence of a large university
Bozeman is one of the highest income cities in Montana, with a median household
income among homeowners of just under $98,495 compared to $80,420 in Billings
and $86,284 in Missoula (host city of the University of Montana) The income among
homeowners is the most relevant comparison here because the overall median
household income in communities with a large college or university is often skewed lower
by the large student population (often renters), as the data show
The mix of jobs in each community is similar, with retail trade and health care being
among the largest sectors in each community In addition, sectors that experienced the
largest growth from 2017 through 2022 among the peer communities included health
care, professional and technical services, and construction
In each community, the number of students as a percentage of population is significant
In Bozeman, students equate to an estimated 28 4 percent of the population similar
to Boulder and Bend In Fort Collins, the largest of the comparison cities, the student
population equates to about 17 percent of the population The large student population
has an impact on the rental housing supply and Bozeman is interested in additional
multifamily and student housing
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Table 3. Peer City Summary
Description
Bozeman,
MT
Billings,
MT
Missoula,
MT
Fort Collins,
CO
Boulder,
CO
Bend,
OR
Demographics
Population 58,814 115,689 73,300 166,788 104,930 97,042
Median Age 28.2 37.6 33.6 30.0 28.9 38.8
% Renter Households 55.4%35.5%53.5%47.0%52.3%37.7%
Median Household Income
Owner $98,495 $80,420 $86,284 $107,459 $130,314 $90,683
Renter $49,543 $38,725 $36,854 $47,690 $43,834 $57,135
All Households $67,354 $63,608 $54,423 $72,932 $74,902 $74,253
Employment1
# of Jobs (2022)58,482 76,410 53,277 134,929 164,074 78,982
Top 3 Sectors
#1 Retail Health Care Health Care Retail Prof. and
Tech. Svcs.Health Care
#2 Hotel/
Restaurant Retail Retail Hotel/
Restaurant Manufacturing Retail
#3 Construction Hotel/
Restaurant
Hotel/
Restaurant Health Care Health Care Hotel/
Restaurant
Top 3 Growth Sectors (‘17-’22)
#1 Construction Construction Prof. and Tech.
Svcs.
Prof. and Tech.
Svcs.
Prof. and Tech.
Svcs.Health Care
#2 Hotel/
Restaurant Health Care Construction Health Care Manufacturing Construction
#3 Retail Finance Manufacturing Manufacturing Information Prof. and
Tech. Svcs.
Higher Education
Major Colleges/Universities
Montana
State
University
Montana
State
University
University of
Montana
Colorado
State
University
University of
Colorado
Oregon State
University -
Cascades
Enrollment (Fall 2022)16,688 4,057 9,955 27,956 36,122 1,271
% of Total Population 28.4%3.5%13.6%16.8%34.4%1.3%
Source: U.S. Census ACS 2021 5-year, QCEW, Economic & Planning Systems
1 Employment data is at the county level
6 Bozeman 2023 Economic and Market Update
Economic Trends
Bozeman and Gallatin County have
a diverse economy driven by key
segments that distinguish it from other
midsize cities While retail trade and hotels
and restaurants are large sectors, Bozeman
and Gallatin County also have significant
numbers of jobs in construction, health
care, professional and technical services,
manufacturing, finance and insurance,
and business services (admin /waste
mgt services) The largest employers in
the city, each with over 1,000 employees,
include Montana State University and
Bozeman Health Deaconess Regional
Medical Center As of 2022 there were
approximately 69,632 private wage and salary jobs in the county and at least 98,000 total
jobs including proprietors and government (including MSU) Over half of the jobs in the
county are within the City of Bozeman A key industry cluster in Bozeman is photonics
with over 1,000 workers spanning multiple industries (approximately 0 3 percent of the
U S photonics jobs1)
1 https://www.montanaphotonics.org/
Figure 2. Private Wage and Salary Employment, Bozeman and Gallatin County, 2022
9,101
8,925
6,956
6,901
5,272
3,972
2,651
2,543
2,137
1,891
1,862
1,728
1,452
938
809
721
262
6,062
5,452
2,309
5,625
3,086
1,749
1,049
1,637
764
1,304
677
500
514
526
110
455
237
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
Retail
Hotel/ Restaurant
Construction
Health Care
Prof. & Tech. Services
Manufacturing
Admin/ Waste Mgmt
Other
Wholesale Trade
Finance
Arts/ Rec
Real Estate
Transportation
Education
Ag./ Forest/ Hunting
Information
Management
Total Jobs
Private Wage and Salary Employment, Bozeman and Gallatin County, 2022
Gallatin Bozeman
Source: Montana DLI, BLS QCEW, Economic& Planning Systems
Z:\Shared\Projects\DEN\233070 Bozeman 2023 Market Update\Data\[233070 -Employment.xlsx]C -Emp
2. Economy
Economic & Planning Systems, Inc 7
Between 2017 and 2022, Gallatin County added 10,191 private wage and salary jobs (3 9
percent per year), with Bozeman capturing approximately 45 percent of the growth
Employment growth was driven by Construction, Hotels and Restaurants, and Retail
(Figure 3) Construction jobs, which are largely cyclical, experienced the highest amount
of job growth in the county In Bozeman, construction was outpaced by job growth in
hotels and restaurants, professional and technical services, and health care
Figure 3. Private Employment Growth, Bozeman and Gallatin County, 2017-2022
1,381
1,234
1,197
1,102
1,008
657
630
549
494
409
391
321
271
184
159
102
609
769
463
693
678
191
-7
327
139
3
213
295
51
73
7
83
-100 100 300 500 700 900 1,100 1,300 1,500
Construction
Hotel/ Restaurant
Retail
Health Care
Prof. & Tech. Services
Admin/ Waste Mgmt
Real Estate
Manufacturing
Arts/ Rec
Wholesale Trade
Finance
Other
Ag./ Forest/ Hunting
Education
Transportation
Information
Total Jobs
Private Employment Growth, Bozeman and Gallatin County, 2017 -2022
Gallatin Bozeman
Source: Montana DLI, BLS QCEW, Economic& Planning Systems
Z:\Shared\Projects\DEN\233070 Bozeman 2023 Market Update\Data\[233070 -Employment.xlsx]C -Emp Growth
Bozeman and Gallatin County experienced only minor job impacts from the COVID-19
pandemic From 2019-2020, the data recorded a small increase in jobs in the county as
a whole, and a loss of about 1,500 jobs in Bozeman (Figure 4) There has been a strong
recovery since the pandemic with Gallatin County adding more than 4,500 jobs in 2021,
over half of which were within Bozeman Job growth continued to be strong into 2022
Figure 4. Annual Change in Private Employment, 2017-2022
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
2017-18 2018-19 2019-20 2020-21 2021-22
Change inEmployment
Annual Change in Private Employment, 2017-2022
Gallatin Bozeman
Source: QCEW, Montana DLI, Economic& Planning Systems
Z:\Shared\Projects\DEN\233070 Bozeman 2023 Market Update\Data\[233070 -Employment.xlsx]C-Yearly Emp Growth
8 Bozeman 2023 Economic and Market Update
Since peaking in 2020 due to COVID-19, unemployment rates in Bozeman and Gallatin
County sharply dipped in 2021 and continued to reduce at a lower rate in 2022, mirroring
statewide trends in Montana In May 2023, both Bozeman and Gallatin County had
unemployment rates of 1 9 percent
Figure 5. Unemployment Rate, 2010-2023
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
YTD
Unemployment Rate
Unemployment Rate, 2010-2023
Montana Gallatin Bozeman
Source: BLS LAUS; Economic & Planning Systems
Z:\Shared\Projects\DEN\233070 Bozeman 2023 Market Update\Data\[233070 -Employment.xlsx]C-Unemployment Rate
GALLATIN COUNTY TOP PRIVATE EMPLOYERS, 2022
DESCRIPTION
INDUSTRY/
EMPLOYMENT TYPE
NUMBER OF
EMPLOYEES
Albertsons Retail Trade 100 to 249
Bozeman Health Regional Medical Center Health Care 1,000 and over
Bozeman Health Medical Group Health Care 100 to 249
Bridger Bowl Ski Resort 100 to 249
Community Food Co-Op Retail Trade 100 to 249
Costco Retail Trade 100 to 249
Gibson Guitars Manufacturing 100 to 249
Glacier Bancorp Finance/ Insurance 100 to 249
Kenyon Noble Lumber & Hardware Retail Trade 250 to 499
Lone Mountain Land Company Construction 100 to 249
Montage Big Sky Hotel/ Restaurant 100 to 249
Murdoch's Ranch & Home Supply Retail Trade 100 to 249
Oracle America Technology 250 to 499
Ressler Motors Retail Trade 100 to 249
Target Retail Trade 100 to 249
Town & Country Foods Retail Trade 100 to 249
Town Pump Retail Trade 250 to 499
Wal Mart Retail Trade 250 to 499
Williams Plumbing & Heating Construction 100 to 249
Zoot Enterprises Technology 100 to 249
Source: Montana Department of Labor and Employment, Economic & Planning Systems
Economic & Planning Systems, Inc 9
Wages
The region continues to experience strong wage growth Average annual wages in Gallatin
County increased at a rate of 7 percent per year between 2017 and 2022 (Table 4 and
Table 5) The construction industry added more that 1,300 jobs, while the average wages
within the Administrative and Support and Waste Management and Remediation
Services and the Accommodation and Food Services industries grew at 8 5% and 8 3%
annually Wages in technology and professional service jobs grew by 6 1 percent per year
Table 4. Job and Wage Growth, Top Sectors, Gallatin County, 2017-2022
2017-2022 Job
Growth
2017 Avg.
Wage
2022 Avg.
Wage
Annual Wage
Growth Description
All Jobs/Sectors 10,191 $41,855 $58,645 7.0%
Construction 1,381 $52,333 $71,702 6.5%
Hotel/ Restaurant 1,234 $20,505 $30,528 8.3%
Retail 1,197 $32,106 $44,516 6.8%
Health Care 1,102 $46,977 $60,672 5.2%
Prof. & Tech. Services 1,008 $72,550 $97,540 6.1%
Admin/ Waste Mgmt 657 $33,943 $50,961 8.5%
Source: Bureau of Labor Statistics QCEW; Economic & Planning Systems
Table 5. Changes in Jobs and Wages for Key Sectors, Gallatin County, 2019-2022
Employment
2017 Avg.
Wage Employment
2022 Avg.
Wage Employment
2021-2022
WagesDescription
Actual Change
All Jobs/Sectors 125 $5,485 4,730 $3,701 3,079 $3,844
Construction 318 $3,015 382 $5,287 173 $6,492
Hotel/ Restaurant -1,267 $1,671 1,328 $3,868 686 $2,331
Retail -139 $3,571 624 $3,247 287 $3,282
Health Care -26 $4,044 561 -$1,918 347 $6,528
Prof. & Tech. Services 161 $12,048 281 $770 163 $9,363
Admin/ Waste Mgmt -72 $2,921 146 $3,920 246 $8,054
Percentage Change
All Jobs/Sectors 0.2%12.0%9.3%7.2%5.6%7.0%
Construction 5.2%5.3%6.0%8.8%2.6%10.0%
Hotel/ Restaurant -15.5%7.4%19.2%15.9%8.3%8.3%
Retail -1.7%10.4%7.6%8.5%3.3%8.0%
Health Care -0.4%7.8%9.4%-3.4%5.3%12.1%
Prof. & Tech. Services 3.4%16.0%5.8%0.9%3.2%10.6%
Admin/ Waste Mgmt -3.1%8.1%6.5%10.1%10.2%18.8%
Source: Bureau of Labor Statistics QCEW; Economic & Planning Systems
10 Bozeman 2023 Economic and Market Update
Wage growth in the region is concentrated below about $50,000 per year (below $24
per hour) and between $60,000 and $90,000 per year ($29 to $46 per hour) from 2017
through 2022 (Figure 6) The 25th percentile of wages accounted for 34 percent of job
growth, or 3,400 jobs, with wages up to just under $50,000 per year Jobs in the 50th to
75th percentile wages comprised 36 percent of new jobs, or 3,600 new jobs In addition, 14
percent of jobs added between 2017 and 2022 were between the 75th and 100th percentile
of wages, at $96,000 to $101,000 per year ($46 to $48 per hour) The drivers of high-wage
jobs include construction, health care, and professional/technical services
Figure 6. Change in Employment by Wage Quartile, Gallatin County, 2017-2022
34%
3,430
17%1,687
36%3,624
14%1,450
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0-25% ($0-$49,530)25-50% ($49,530-$60,606)50-75% ($60,606-$96,452)75-100% ($96,452-$101,370)
Change in Employment
Change in Employment by Wage Quartile in Gallatin County, 2017 -2022
Source: BLS QCEW, Economic & Planning Systems
Z:\Shared\Projects\DEN\233070 Bozeman 2023 Market Update\Data\[233070 -Employment.xlsx]C-Wage Quartiles GC
Economic & Planning Systems, Inc 11
Economic Drivers
The regional workforce is highly skilled and well educated Approximately 59 8 percent of
Bozeman’s workforce has a bachelor’s degree or higher (Table 6) Only Boulder exceeds
Bozeman in this ranking, with 62 8 percent of its population having a bachelor’s degree
or higher The presence of MSU and the high concentration of professional and high
skill jobs—such as technology and health care—are drivers of the highly educated local
workforce Places with a high quality of life are also able to attract skilled labor as highly
educated skilled workers have more choices and flexibility in where they choose to work
and live
Table 6. Population 25+ by Educational Attainment, Bozeman, 2022
Education Level Bozeman Billings Boulder Bend
Fort
Collins Missoula
Population 25+37,259 84,973 64,468 74,433 107,845 51,832
High School or Less, No Diploma 1.9%4.5%2.7%3.7%2.9%3.1%
High School Graduate or Equivalent 12.8%26.5%5.4%15.4%14.5%17.4%
Some College, No Degree 17.1%22.1%9.0%21.1%15.3%19.7%
Associate's Degree 5.3%9.0%4.3%10.4%8.8%8.5%
Bachelor's Degree 35.8%24.5%38.7%30.2%33.7%30.6%
Graduate/ Professional Degree 27.0%13.5%40.0%19.0%24.7%20.7%
Total 100.0%100.0%100.0%100.0%100.0%100.0%
Bachelor’s Degree or Higher 62.8%38.0%78.7%49.2%58.4%51.3%
Source: U.S. Census; ESRI Business Analyst; Economic & Planning Systems
12 Bozeman 2023 Economic and Market Update
This chapter provides an overview of the commercial real estate trends and conditions
in Bozeman and Gallatin County This analysis includes a summary of the total
inventory, rental rates, vacancy rates, and deliveries Commercial real estate data comes
from CoStar, a subscription real estate database and market information service
Office Market Trends
From 2010 to the second quarter of 2023, total office space in Gallatin County grew by
approximately 972,000 square feet, or an average of 78,000 square feet annually This
upward trend has persisted in recent years, with roughly 153,000 square feet added to the
region since 2020 Net inventory growth is determined by subtracting the square footage
lost due to demolitions or conversions from the square footage gained through new
construction (Table 7) Bozeman is the central hub for office space with Gallatin County,
holding 72 3 percent of the entire county’s office inventory In terms of the direction of the
market, Bozeman captured 66 percent of new office construction in Gallatin County since
2010 and nearly 100 percent of the market since 2020
Bozeman average office lease rates have increased from $21 98 in 2020 to $26 35 per
square foot this year New construction rents are considerably higher in the $30 per
square foot range Over the last decade, office vacancy rates in Gallatin County and
Bozeman have consistently stayed below 4 0 percent By the close of 2022, both the city
and county reached unprecedented lows in average vacancies, recording rates of 1 7
percent and 1 4 percent, respectively Presently, vacancy rates stand at 2 8 percent for the
city and 2 7 percent for the county
Data on office
construction or
“deliveries” show more
detail on market activity
than the broader
inventory trends Since
2014, all newly developed
office space tracked
by CoStar has been
exclusively located in
Bozeman From 2010
to Q2 2023 Bozeman
delivered 620,210 square
feet of office, accounting
for roughly 66 percent of
the total office growth
in all of Gallatin County
(Figure 7)
3. Commercial Real Estate
Economic & Planning Systems, Inc 13
Table 7. Office Summary , 2010-2023 Q2
Description 2010 2015 2020 2021 2022 2023 Q2
Inventory
Bozeman 2,201,835 2,288,786 2,690,529 2,718,398 2,827,611 2,843,221
Gallatin County 2,963,002 3 ,117, 373 3,780,726 3,808,595 3,919,198 3,934,808
Bozeman as Pct.
of County 74.3%73.4%71.2%71.4%72.1%72.3%
Avg. Rent
Bozeman $11.76 $14.64 $21.98 $22.34 $24.58 $26.35
Gallatin County $11.75 $14.60 $20.98 $20.98 $22.30 $24.33
Avg. Vacancy
Bozeman 3.3%3.1%2.9%2.4%1.7%2.8%
Gallatin County 3.0%3.4%2.5%2.6%1.4%2.7%
Change 2010-2023 Q2 Change 2020-2023 Q2
Description Total Ann. #Ann. %Total Ann. #Ann. %
Inventory
Bozeman 641,386 51, 311 2.1%152,692 61,077 2.2%
Gallatin County 971,806 77,744 2.3%154,082 61,633 1.6%
Pct. of County 66.0%99.1%
Avg. Rent
Bozeman $14.59 $1.17 6.7%$4.38 $1.75 7.5%
Gallatin County $12.58 $1.01 6.0%$3.34 $1.34 6.1%
Source: CoStar; Economic & Planning Systems
Figure 7. Office Deliveries, 2010-2023 Q2
0
50,000
100,000
150,000
200,000
250,000
300,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Q2
sq. ft.
Office Deliveries, 2010 -Q2 2023
Bozeman Rest of Gallatin County
Source: Costar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: Costar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
14 Bozeman 2023 Economic and Market Update
Some notable office and office/mixed use projects built since 2021 are listed below
(Table 8) From 2021 to Q2 2023, Bozeman has added 132,906 square feet of office space
These newer buildings have higher rents averaging $30 per square foot, which is higher
than the market average of $26 per square foot
Table 8. Recent Office Development, Bozeman
Description Address Year Built RBA
Avg Rent
per sq. ft.
Notable Deliveries
The Oz 2952 Technology Blvd W 2023 15,610 $32.60
Aspen Crossing 505 W Aspen St 2022 64,000 $35.00
DA Davidson, VA Clinic 1101 E Main St 2022 33,213 $30.00
Security Title Building 1160 29 2022 12,000 $31.00
155 Mill Town Loop Unit A 155 Mill Town Loop Unit A 2022 1,390 $29.46
1150 S 29th Ave 1150 S 29th Ave 2021 3,716 $28.87
718 W Babcock St 718 W Babcock St 2021 2,977 $29.10
Total/Average 132,906 $30.17
Source: CoStar; Economic & Planning Systems
Other notable and proposed
office and mixed-use
developments are listed and
described below
RUH Building – Situated in North
7th Midtown Urban Renewal
District, the RUH Building is a
mixed use building anchored by a
brewery on the ground floor and
16 apartments on the upper two
floors
Aurora Building – Aurora
Innovation, an autonomous vehicle
company, is building a 78,000
square foot R&D facility on the
MSU Innovation Campus It will
include advanced manufacturing
space and clean room facility
Photo Courtesy: JDS Architects
Economic & Planning Systems, Inc 15
Aspen Crossing – Aspen Crossing
at 505 West Aspen, a prominent
3-story development, stands out
as one of the most significant
additions to Midtown It is
currently home to Bourbon, a
BBQ restaurant and whiskey bar,
and the Ponderosa Social Club
The building also has an array
of office spaces and third floor
condominiums
Industry – Industry is an 87,000
square foot collaborative
workspace and incubator
building proposed by the
developer of Industry in the
River North neighborhood in
Denver, CO The building broke
ground in 2022 and is expected
to be complete in 2023 The
project will bolster MSU’s 42-acre
Innovation Campus, with goals of
providing workplace innovation
and creating open collaboration
between local and national
enterprise in conjunction with
MSU
Cannery District – Advertised
as Bozeman’s most vibrant
commercial, retail, and residential
community, the Cannery District
has approximately 111,000 square
feet of office and retail space It
also includes a 52-unit market
rate apartment complex built in
2020, aptly named Cannery Flats
The Cannery District incorporates
adaptive reuse of historic
buildings and is currently home
to 25 professional and technology
companies, 13 architecture
engineering and design firms,
12 retail shops, 11 health and
wellness establishments, 8 restaurants, and 2 nonprofits
Photo Courtesy: Saul Creative
16 Bozeman 2023 Economic and Market Update
Industrial/Flex Market
Between 2010 and Q2 2023, industrial space in Gallatin County grew by roughly 827,000
square feet, or an average of 66,000 square feet annually (Table 9) Industrial growth
in the city has slowed dramatically, with approximately 2,500 square feet added since
2020, or nearly 1,000 square feet per year In contrast, the rest of the county added about
278,000 square feet of industrial space, indicating that Bozeman’s market share was less
than one percent of the market growth The lower land costs in areas outside of the city
are a large factor driving the growth of industrial space in other parts of Gallatin County
including Four Corners and Belgrade However, there is still a market in Bozeman for
higher value industrial uses and flex/R&D space This is especially true for companies that
are interested in leveraging Bozeman’s strategic location and benefiting from the City’s
well-developed municipal infrastructure and amenities
Since 2010, rental rates in Gallatin County have grown by 6 2 percent annually, while
Bozeman experienced a 3 3 percent growth rate As of Q2 2023, industrial rents in
Bozeman averaged $16 06 per square foot, compared to $14 63 in Gallatin County Average
industrial rents in Bozeman actually dropped slightly in Bozeman over the past two and
a half years Vacancy rates in both the city and county have remained low for the past
decade, with current vacancy rates at 3 3 percent in Bozeman and 2 0 percent in Gallatin
County These vacancy rates are up compared to the previous year due to the addition of
new industrial space, but still remain low
Table 9. Industrial Summary, Gallatin County, 2010-2021
Description 2010 2015 2020 2021 2022 2023 Q2
Inventory
Bozeman 910,616 928,526 938,810 938,810 938,810 941,304
Gallatin County 3,295,993 3,334,838 3,841,931 3,880,686 3,890,686 4,122,668
Bozeman as Pct.
of County 27.6%27.8%24.4%24.2%24.1%22.8%
Avg. Rent
Bozeman $10.67 $10.15 $17.44 $22.32 $21.14 $16.06
Gallatin County $6.88 $6.18 $12.73 $14.04 $16.90 $14.63
Avg. Vacancy
Bozeman 1.4%3.1%2.1%0.1%3.1%3.3%
Gallatin County 2.5%2.9%1.5%0.6%1.0%2.0%
Change 2010-2023 Q2 Change 2020-2023 Q2
Description Total Ann. #Ann. %Total Ann. #Ann. %
Inventory
Bozeman 30,688 2,455 0.3%2,494 998 0.1%
Gallatin County 826,675 66,134 1.8%280,737 112,295 2.9%
Pct. of County 3.7%0.9%
Avg. Rent
Bozeman $5.39 $0.43 3.3%-$1.38 -$0.55 -3.2%
Gallatin County $7.75 $0.62 6.2%$1.90 $0.76 5.7%
Source: CoStar; Economic & Planning Systems
Economic & Planning Systems, Inc 17
In all of Gallatin County, 914,288 square feet of industrial space were delivered since 2010
(Figure 8) Of these deliveries, 6 5 percent were located in Bozeman
Figure 8. Industrial Deliveries, 2010-2023 Q2
0
50,000
100,000
150,000
200,000
250,000
300,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Q2
sq. ft.
Industrial Deliveries, 2010 -2023 Q2
Bozeman Rest of Gallatin County
Source: Costar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: Costar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: Costar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: Costar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Most of the recent industrial and flex construction in the area has been outside the city in
the Four Corners area of Gallatin County
Table 10. Recent Industrial/Flex Projects, Bozeman
Description Address Year Built RBA
Avg Rent
per sq. ft.
Notable Deliveries
Revive Salon, Aurore Bakery, Hybrid
Motion, LLC 141 Baxter Lane West 2023 34,000 $6.24
Swiss Plaza Condo 2994-3016 N 27th Ave 2023 2,494 $5.78
Honey Sour Four Corners 125 Ginger Bear Ln 2022 5,000 $6.64
Total/Average 41,494 $6.22
Source: CoStar; Economic & Planning Systems
There are three large sites in Bozeman that can support more industrial and business
park development as described on the following page
18 Bozeman 2023 Economic and Market Update
Pole Yard Urban Renewal District – An 87-acre
site located between Interstate 90 corridor and
Montana Rail Link right-of-way Portions of the
site include a partially delisted Superfund site
owned by the Idaho Pole Company There are
environmental restrictions that limit residential
development at the property, and any restrictions
must be approved by the EPA and Montana
Department of Environmental Quality (DEQ)
Nevertheless, the site could still foster commercial
development activity in the future
North Park Urban Renewal District – A 275-acre
area in north Bozeman east of I-90 and west of
Frontage Road The site is currently vacant, but
previous plans at the site have included 790,000
square feet of light industrial space and nearly
500,000 square feet of flex space A rail siding off
the Burlington-Northern Santa Fe main rail line
was recently completed
Nelson Meadows Business Park – A master
planned commercial subdivision located in
northwest Bozeman at the corner of Nelson Road
and Frontage Road The site is comprised of 27
building lots that vary in size from 0 7 acres to
5 27 acres The site has direct access to I-90 and is
zoned M-1 for Light Manufacturing All but 4 lots
have been sold
Economic & Planning Systems, Inc 19
Retail Market
Bozeman is the regional trade hub for Gallatin County and serves a roughly 50-mile
radius Gallatin County has an estimated 6 2 million square feet of retail inventory, 73 4
percent or 4 6 million square feet of which is located within Bozeman (Table 11) Average
retail rents are similar in both the city and county at approximately $19 00 per square foot
Retail rents grew slowly at about 2 2 percent per year, which was slower than the growth
in office rents at 6 0 percent per year Vacancy rates for retail space in Bozeman and
Gallatin County have been notably low since 2010 and are currently 1 1 percent
Table 11. Retail Summary, 2010-2023 Q2
Description 2010 2015 2020 2021 2022 2023 Q2
Inventory
Bozeman 4,149,498 4,358,021 4,481,195 4,552,195 4,583,913 4,585,599
Gallatin County 5,713,199 5,973,505 6,129,850 6,200,850 6,232,568 6,250,254
Bozeman as Pct.
of County 72.6%73.0%73.1%73.4%73.5%73.4%
Avg. Rent
Bozeman $17.57 $10.05 $20.29 $21.16 $21.32 $19.42
Gallatin County $14.63 $10.03 $20.19 $21.38 $21.23 $19.24
Avg. Vacancy
Bozeman 1.8%4.3%2.3%1.7%1.5%1.2%
Gallatin County 2.1%4.3%2.1%1.6%1.3%1.1%
Change 2010-2023 Q2 Change 2020-2023 Q2
Description Total Ann. #Ann. %Total Ann. #Ann. %
Inventory
Bozeman 436,101 34,888 0.8%104,404 41,762 0.9%
Gallatin County 537,055 42,964 0.7%120,404 48,162 0.8%
Pct. of County 81.2%86.7%
Avg. Rent
Bozeman $1.85 $0.15 0.8%-$0.88 -$0.35 -1.7%
Gallatin County $4.61 $0.37 2.2%-$0.95 -$0.38 -1.9%
Source: CoStar; Economic & Planning Systems
20 Bozeman 2023 Economic and Market Update
Table 12. Recent Retail Projects, Bozeman
Description Address Year Built RBA
Avg Rent
per sq. ft.
Notable Deliveries
Bozeman Shopping Center N 15th Ave 2023 22,000 $23.60
Whole Foods 2905 W Main St 2022 31,718 $24.36
WinCo Foods 2913 Max Ave 2021 75,000 ---
Total/Average 128,718 $23.98
Source: CoStar; Economic & Planning Systems
Between 2010 and Q2 2023, Bozeman delivered roughly 653,000 square feet of retail
space (Figure 9), or 54,000 square feet per year Just over 200,000 square feet of this was
in 2011 when two large car dealerships were built on S Cottonwood Bozeman continues
to have nearly 88 percent market share in new retail construction Recent new retail
projects include the first Whole Foods and a new WinCo Foods supermarket
Figure 9. Retail Deliveries, 2010-2023 Q2
0
50,000
100,000
150,000
200,000
250,000
300,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Q2
sq. ft.
Retail Deliveries, 2010-2023 Q2
Bozeman Rest of Gallatin County
Source: Costar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: Costar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Economic & Planning Systems, Inc 21
Bozeman’s retail inventory is comprised of a wide variety of national grocery chains,
big box retailers, and smaller local stores There are eight full-service supermarkets in
Bozeman (including the Walmart Supercenter) plus several smaller specialty food stores
and independent grocers such as the Community Food Co-op Bozeman also has several
national general merchandise and home improvement anchor retailers including Costco,
Target, Home Depot, Lowe’s, Kohl’s, and Macy’s
BOZEMAN RETAIL INVENTORY
DESCRIPTION STORE TYPE
AVG. SQ.FT.
DESCRIPTION STORE TYPE
AVG. SQ.FT.
Supermarkets and Grocery Stores Shoppers’ Goods
Walmart 200,550 Costco 114,512
Target 107,694 Kohl's 57,045
Rosauers Food & Drug Center 60,045 Macy's 51,828
Safeway 56,117 Sportsman's Warehouse 44,018
Smith's 55,000 Hobby Lobby 41,796
Albertsons 53,746 Bob Ward's Sports & Outdoors 30,495
Whole Foods Market 31,718 Ross Dress For Less 30,130
Heebs Fresh Market 26,449 REI 25,177
Town and Country Foods 20,404 Barnes & Noble 25,000
Building Material and Garden Joann 25,000
Lowe’s 99,440 Staples 22,194
The Home Depot 95,337 T.J. Maxx 21,064
Murdoch's Ranch & Home Supply 48,904 Michaels 20,372
Ashley HomeStore 30,800 Universal Athletic 20,000
Ace Hardware 24,302 Bed Bath & Beyond 19, 711
Commercial Metals 24,275
Harbor Freight Tools 19,582
22 Bozeman 2023 Economic and Market Update
Notable Projects
A major retail repositioning project underway is the redevelopment of the Gallatin Valley
Mall Whole Foods will be a new anchor for the redevelopment, plus the existing Macy’s,
Barnes & Noble, Regal Cinemas, and JoAnn Fabrics The redevelopment strategy includes
an additional 15,000 square feet of retail space, with a general concept of creating public
gathering space, a main street feel, and a broad mix of tenants, including healthcare, and
entertainment SCL Health and J-Crew Factory Outlet are recent major tenants locating in
the project
Ferguson Farm is
a roughly 50-acre
commercial district
being developed on
Bozeman’s west side
at S Cottonwood
and Huffine (U S 191)
It began with the
Ikon Apartments,
a 336 unit highly
amenitized
apartment building
Phase I is anchored
by The Market, a
21,000 sq ft food hall
with several food and
beverage vendors
and specialty shops
in a common
space Phase II is an additional 31 acres of mixed use development with the potential for
approximately 850,000 square feet of development
Photo Courtesy: Bozeman Real Estate Group
Economic & Planning Systems, Inc 23
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This chapter provides an overview of the housing market in Bozeman It summarizes
building permit trends, home prices, the rental market, and key affordability indicators
Construction
Between 2018 and 2023 the City of Bozeman issued approximately 5,600 residential
building permit units (Table 13), which is an average of 1,100 per year The highest year was
2021 with 1,383 new construction permits issued
Bozeman is building a range of housing types Since 2018, multifamily construction
(apartments and condominiums) have been the largest share of new construction with
3,700 units permitted, or 66 percent of the total Single family detached made up 17
percent of construction, or just under 1,000 new units Single family attached (duplex,
triplex, fourplex) were 9 4 percent of construction In 2021, the City started tracking
detached accessory dwelling units (ADUs), and 64 have been permitted since then
Construction has remained strong in 2023, with 913 new permits issued as of June
Table 13. Bozeman Building Permit Unit Trends
June 2018-2023
Description 2018 2019 2020 2021 2022 2023 Total Avg.%
Single Family 229 167 150 195 116 112 969 194 17.3%
Duplex ------106 40 44 190 38 3.4%
Triplex ------39 51 63 153 31 2.7%
Fourplex ------92 68 24 184 37 3.3%
Detached Accessory
Dwelling Unit ------25 26 13 64 13 1.1%
Multifamily / Condo 593 546 734 866 337 624 3,700 740 66.0%
Townhome 37 78 61 60 81 33 350 70 6.2%
Total 859 791 945 1,383 719 913 5,610 1,122 100.0%
Source: Economic & Planning Systems
4. Housing
Economic & Planning Systems, Inc 25
Housing Prices
Greater Bozeman has seen unprecedented appreciation in home prices The current
median home price is $767,500, up 1 7 percent from 2022 YTD Prices are still high, but the
rate of appreciation has slowed The largest price increases occurred between 2020 and
2021 with an almost 30 percent increase (Table 14) The median home price in the city
is now $767,500 compared to $359,500 in 2016 This rapid increase is related to amenity
migration away from large metro areas during the COVID-19 pandemic Bozeman has
already experienced steady and rapid appreciation since 2016 averaging 12 4 percent per
year on the median sale price The surrounding communities and entire county have also
experienced similar trends with prices essentially doubling over the past six years
The increase in prices has serious implications for affordability, workforce attraction and
retention, and quality of life From an investor standpoint it indicates robust demand, tight
supply, and opportunities to develop in a strong market The City is interested in ways to
increase the housing supply responsibly in a way that maintains community health and
wellbeing The City has incentives for affordable and workforce housing up to 120 percent
of AMI including funding for gap closure, a density bonus program, and leveraging tax
increment financing through their robust urban renewal program
Table 14. Home Price Trends, 2016-2023 Q2
2016-2023 Q2
Description 2016 2017 2018 2019 2020 2021 2022 2023 Q2 Total
Ann.
%
Median Sales Price
Bozeman $359,500 $381,500 $427,500 $460,000 $540,000 $700,000 $755,000 $767,500 $408,000 12.4%
Belgrade $255,000 $287,250 $320,000 $340,950 $375,000 $535,000 $625,000 $614,950 $359,950 14.5%
Greater Manhattan $280,000 $307,000 $389,000 $416,000 $564,750 $640,950 $832,500 $585,000 $305,000 12.0%
Gallatin County $310,000 $331,150 $374,660 $397,500 $439,900 $685,000 $811,000 $741,500 $431,500 14.4%
YOY % Change
Bozeman ---6.1%12.1%7.6%17.4%29.6%7.9%1.7%
Belgrade ---12.6%11.4%6.5%10.0%42.7%16.8%-1.6%
Greater Manhattan ---9.6%26.7%6.9%35.8%13.5%29.9%-29.7%
Gallatin County ---6.8%13.1%6.1%10.7%55.7%18.4%-8.6%
Source: Gallatin Association of Realtors; Economic & Planning Systems
26 Bozeman 2023 Economic and Market Update
Apartment Market
In Q2 2023, CoStar reported 5,590 apartment units in Bozeman, and an inventory increase
of 208 units per year on average (Table 15) This only includes units within apartment
buildings and does not include other rented homes Bozeman has approximately 90
percent of the multifamily inventory in Gallatin County, as tracked by CoStar From 2010 to
Q2 2023, Bozeman delivered 2,074 apartment units (Figure 10), which is nearly all of the
multifamily market in Gallatin County as a whole
On average, vacancy rates have been consistently low over the past decade Because the
rental market in Bozeman is undersupplied, the vacancy rates have followed a pattern of
increasing when new inventory enters the market, and then quickly decreasing as the
units are quickly absorbed, thus explaining the high vacancy rates in 2015 and the current
rate of 8 2 percent While Bozeman’s current vacancy rate is up significantly compared to
2022, given that Bozeman just delivered an estimated 700 units to the market, it is likely
that these rates will normalize by the end of the year
Table 15. Multifamily Summary, 2010-2023 Q2
Description 2010 2015 2020 2021 2022 2023 Q2
Inventory
Bozeman 2,533 2,934 3,805 3,928 4,244 4,607
Gallatin County 3,539 4,032 4,971 5,155 5,507 6,199
Bozeman as Pct.
of County 71.6%72.8%76.5%76.2%77.1%74.3%
Avg. Rent (per unit)
Bozeman $1,328 $1,410 $1,608 $1,768 $1,902 $1,961
Gallatin County $1,382 $1,467 $1,660 $1,804 $1,930 $1,976
Avg. Vacancy
Bozeman 1.8%4.3%2.3%1.7%1.5%1.2%
Gallatin County 2.1%4.3%2.1%1.6%1.3%1.1%
Change 2010-2023 Q2 Change 2020-2023 Q2
Description Total Ann. #Ann. %Total Ann. #Ann. %
Inventory
Bozeman 2,074 166 4.9%802 321 8.0%
Gallatin County 2,660 213 4.6%1,228 491 9.2%
Pct. of County 78.0%65.3%
Avg. Rent
Bozeman $633.25 $50.66 3.2%$352.75 $141.10 8.3%
Gallatin County $593.50 $47.48 2.9%$315.75 $126.30 7.2%
Source: CoStar; Economic & Planning Systems
Economic & Planning Systems, Inc 27
Figure 10. Multifamily Deliveries, 2010-2023 Q2
0
100
200
300
400
500
600
700
800
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023Q2
units
MF Deliveries, 2010-Q2 2023
Bozeman Rest of Gallatin County
Source: Costar; Economic & Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: Costar; Economic & Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Source: CoStar; Economic& Planning Systems
[link to source]
Since 2021, Bozeman has seen the completion of eight major (50 units or more)
apartment buildings, six of which are market rate The two affordable apartment
buildings have a combined total of 270 units, with typical rents ranging from $1,251 to
$2,209 Of the market rate apartments, average rents range from $2,150 to $2,521 per unit
The largest of these apartment buildings with 268 units, The Oxbow, built in 2023, has
an average rent of $2,410 and an average unit size of 887 square feet Following closely
is the 19th and Graf Apartment Homes, featuring 195 units with an average unit size of
1,052 square feet and rents averaging $2,521 Nexus Point, constructed in 2022, offers an
average rent of $2,253 and an average square footage of 1,043 per unit The Silver Creek
Apartments, built in 2021, has an average rent of $2,150 and an average unit size of 877
square feet Lastly, Haymaker commands an average rent of $2,352 with an average unit
size of 851 square feet
Arrowleaf Park is a 135-unit affordable rental building that used low-income housing tax
credits (LIHTC) in its financing and is restricted to people earning up to 60 percent of
AMI It was developed in partnership with the local housing and social services nonprofit
HRDC and GMD Development The Annex of Bozeman combines student housing and
workforce rental housing with rents restricted to people earning between 80 and 120
percent of AMI
28 Bozeman 2023 Economic and Market Update
Table 16. Recent Multifamily Development, Bozeman
Notable Deliveries Address
Year
Built Units
Avg. Effective
Rent Per Unit
Market Rate
The Oxbow 5503 S Cottonwood Rd 2023 268 $2,410
19th and Graf Apartment Homes 2900 S 21st Ave 2023 195 $2,521
Nexus Point 2145-2075 W Arnold St 2022 120 $2,253
Silver Creek Apartments 1481 N 25th Ave 2021 118 $2,150
Haymaker 1624 W Babcock St 2023 95 $2,352
Penrose Apartments 300 Enterprise Blvd 2021 60 $2,346
Total/Average 856 $2,339
Affordable/Rent Subsidized
Arrowleaf Park 1683 Tschache Ln 2022 136 $1,251
The Annex of Bozeman 1800s 22nd St 2023 134 $2,209
Total/Average 270 $1,730
Source: CoStar; Economic & Planning Systems
The Oxbow
19th and Graf Apartment Homes
Nexus Point
Silver Creek Apartments
Haymaker
Economic & Planning Systems, Inc 29
Affordability
The rapid increase in housing prices has priced many people out of the market In 2016,
a household earning about 110 percent of the HUD area median income (AMI) could
afford the median priced home In 2022, a household needed to earn 183 percent of AMI
to afford a median priced home and 173 percent of AMI in 2023 The combination of a
shortage of inventory, a spike in construction costs, and pandemic-related migration has
driven up housing prices sharply Increasing the supply of housing will be important to
addressing the shortage of affordable and workforce housing
Table 17. Required Annual Income to Afford Median Home Price, 2016-2023
In 2016 the income levels needed to afford the median priced home were at 100 to 120
percent of AMI (Figure 11) In 2023 there are income gaps at all AMI levels below about 170
percent of AMI Households earning 150 percent of AMI ($189,600) would still need to earn
another $28,900 per year to afford the median priced home (Figure 12)
Bozeman Factor 2016 2017 2018 2019 2020 2021 2022 2023 Q2
Median Home Price $359,500 $381,500 $427,500 $460,000 $540,000 $700,000 $755,000 $767,500
Mortgaged Amount
(less: downpayment)5.0%
down pmt $341,525 $362,425 $406,125 $437,000 $513,000 $665,000 $717,250 $729,125
Mortgage Interest Rate 3.7% int.4.0% int.4.5% int.3.9% int.3.1% int.3.0% int.5.3% int.6.6% int.
Loan Term 30-years 30-years 30-years 30-years 30-years 30-years 30-years 30-years
Monthly Costs
Mortgage Payment (Monthly)$1,572 $1,730 $2,058 $2,061 $2,191 $2,804 $3,983 $4,657
Less: Insurance $1,500/
Year $125 $125 $125 $125 $125 $125 $125 $125
Less: Property Taxes 0.9%$300 $318 $356 $383 $450 $583 $629 $640
Less: Miscellaneous $500/
Year $42 $42 $42 $42 $42 $42 $42 $42
Total Monthly Housing Costs $2,038 $2,215 $2,581 $2,611 $2,807 $3,554 $4,779 $5,463
Required Annual Income 30%$81,529 $88,594 $103,228 $104,448 $112,290 $142,147 $191,150 $218,515
100% AMI for Family of 4 $74,200 $71,000 $81,200 $90,300 $90,400 $88,900 $104,700 $126,400
AMI for Family of 4 110%125%127%116%124%160%183%173%
[1] rounded to nearest major AMI category
Source: US Census; Economic & Planning Systems
30 Bozeman 2023 Economic and Market Update
Figure 11. Income Gap to Afford Median Priced Home, Bozeman, 2016
$59,360
$74,200 $89,040
$111,300
$133,560
$22,169 $7,329
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
80%100%120%150%180%Household IncomeAMI (4-person household)
AMI (4-person household)Gap
Source: U.S.Census; Economic & Planning Systems
$81,529 Income Required to Afford Median Home Price (2016)
Z:\Shared\Projects\DEN\233070 Bozeman 2023 Market Update\Models\[233070-Income Affordability.xlsx]T-AMIGap
Figure 12. Income Gap to Afford Median Priced Home, Bozeman, 2023
$101,120
$126,400
$151,680
$189,600
$227,520
$117,395 $92,115 $66,835
$28,915
$0
$50,000
$100,000
$150,000
$200,000
$250,000
80%100%120%150%180%
AMI (4-person household)
AMI (4-person household)Gap
Source: U.S.Census; Economic & Planning Systems
$218,515 Income Required to Afford Median Home Price (2023)
In housing policy, a household is defined as cost burdened when they are paying more
than 30 percent of their income towards rent or mortgage payments Among renters
there is a large amount of cost burdened households – nearly half of all renters (48
percent) About a quarter of Bozeman homeowners are cost burdened and the American
Community Survey estimates these households declined slightly from 2010 through 2019
The data mostly reflect people who already own their homes and have not caught up
with new buyers in the market at the higher prices noted above
Economic & Planning Systems, Inc 31
Housing Demand
In this section, a housing demand projection is provided to inform the City as well as real
estate interests on the growth potential and need in Bozeman The projection links job
growth to housing demand and estimates that the City needs over 700 housing units
annually (Table 18) just to keep up with job growth at 2 0 percent per year (compared to
3 9 percent annual growth over the past five years)
However, there are other strong market demand drivers that need to be accounted for
First, because Bozeman is becoming more of a destination for second homeowners and
part-time residents an additional 10 percent is added to the demand estimate Second,
remote worker in-migration is occurring There is no data available today that tracks
remote workers because their paychecks are often associated with the physical off
location of their job outside the Gallatin Valley We have added another 10 percent to the
demand projections to reflect the estimated impact on the market from remote workers
In total, we estimate that the City can support demand for nearly 900 housing units
per year (Table 18) A potential housing mix based on past construction and goals of
supporting small homes and infill construction is suggested as well (Table 19)
Table 18. Bozeman Housing Demand Projection
2022-2032
Description Factor 2022 2032 Total Annual
Total Jobs - Gallatin County 2.0%100,000 121,900 21,900 2,190
Less: Proprietor Jobs Overcount [1]-10.0%-10,000 -12,190 -2,190 -219
Employed People 1.10 jobs/empl.81,818 99,736 17,918 1,792
Employed Households 1.30 jobs/household 62,940 76,720 13,780 1,378
Normal Vacancy Adjustment 5%3,310 4,040
Housing Units - Gallatin County 66,250 80,760 14,510 1,451
Baseline Demand - Bozeman
Bozeman Market Share 50.0%31,320 40,090 7,250 725
Other Market Influences
Part Time Residence Adjustment 10%806
In-migration and remote worker adjustment 10%895
[1] Counting of partnerships and LLCs in Bureau of Economic Analysis data often results in double counting of employees.
Source: Economic & Planning Systems
Table 19. Bozeman Housing Unit Projection
Description Factor 2022-2026 2027-2032 Total Annual
New Unit Demand in Bozeman 895/yr.4,475 4,475 8,951 895
Bozeman Construction Projection
Single Family (Detached)35.0%1,566 1,566 3,133 313
Townhome/Triplex/Duplex 30.0%1,343 1,343 2,685 269
Multifamily 35.0%1,566 1,566 3,133 313
Total 100.0%4,475 4,475 8,951 895
[1] Mobile homes and other miscellaneous housing types are not included
Source: Economic & Planning Systems
32 Bozeman 2023 Economic and Market Update