HomeMy WebLinkAbout24- 2024Q2 Economic Market Report 09-24-2024Economic & Planning Systems, Inc.
The Economics of Land Use
Prepared by:Prepared for:
City of Bozeman, MT Economic Development Department
Report
Bozeman
2024Q2 Economic
and Market Update
September 2024 EPS #233073
ii Bozeman 2024Q2 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
Workforce 12
Commercial Real Estate 13
Office Market Trends 13
Industrial/Flex Market 16
Retail Market 19
Housing 23
Construction 23
Housing Prices 24
Apartment Market 25
Affordability 29
Housing Demand 31
Economic & Planning Systems, Inc iii
Table of Contents
TablesFiguresTable 1 Population and Housing Units, 2010-2024 2
Table 2 MSU Enrollment, 2001-2023 3
Table 3 Peer City Summary 6
Table 4 Job and Wage Growth, Top Sectors, Gallatin County, 2018-2023 10
Table 5 Changes in Jobs and Wages for Key Sectors, Gallatin County, 2018-2023 10
Table 6 Population 25+ by Educational Attainment, Bozeman, 2023 12
Table 7 Office Summary , 2010-2024 Q2 14
Table 8 Recent Office Development, Bozeman 15
Table 9 Industrial/Flex Summary, 2010-2024 Q2 16
Table 10 Recent Industrial/Flex Projects 17
Table 11 Retail Summary, 2010-2024 Q2 19
Table 12 Recent Retail Projects, Bozeman 20
Table 13 Bozeman Permit Trends, 2018-2023 23
Table 14 Home Price Trends, 2019-2024 Q2 24
Table 15 Multifamily Summary, 2010-2024 Q2 25
Table 16 Recent Multifamily Development, Bozeman 27
Table 17 Required Annual Income to Afford Median Home Price, 2019-2024 Q2 29
Table 18 Bozeman Housing Demand Projection 31
Table 19 Bozeman Housing Unit Projection 31
Figure 1 Gallatin Valley Region 2
Figure 2 Private Wage and Salary Employment, Bozeman and Gallatin County, 2023 7
Figure 3 Private Employment Growth, Bozeman and Gallatin County, 2018-2023 8
Figure 4 Annual Change in Private Employment, 2018-2023 8
Figure 5 Unemployment Rate, 2010-2024 9
Figure 6 Change in Employment by Wage Quartile, Gallatin County, 2018-2023 11
Figure 7 Office Deliveries, 2010-2024 Q2 14
Figure 8 Industrial Deliveries, 2010-2024 Q2 17
Figure 9 Retail Deliveries, 2010-2024 Q2 20
Figure 10 Multifamily Deliveries, 2010-2024 Q2 26
Figure 11 Income Gap to Afford Median Priced Home, Bozeman, 2019 30
Figure 12 Income Gap to Afford Median Priced Home, Bozeman, 2024 30
Notable changes since 2023Q2
Since the 2023 Q2 report, the economic fundamentals in Bozeman and Gall-atin County have not changed. There are however some nuanced but notable trends that this 2024Q2 analysis has identified.
Economic engine for the state
X The State of Montana added 40,000 jobs from 2018-2023. Bozeman and Gallatin
County accounted for 30% of the state’s job growth.
Minor shifts in industry growth patterns
X Countywide, hotels and restaurants became the largest industry in terms of total
jobs, moving the retail sector from the largest to second largest. Construction
remains the 3rd largest industry, and health care the 4th largest.
X As of the 2023Q2 report, construction was the fastest growing industry for
the 5-year period of 2017-2023Q2. As of 2024 Q2, job growth in hotels
and restaurants edged out construction for the 2018-2024Q2 time-period
(countywide). In the City of Bozeman, hotels and restaurants were also the fastest
growing sector, followed by health care (2nd), construction (3rd), professional and
technical services (4th), and retail (5th).
Home price moderation in some areas
X The higher interest rate market has had some impacts on prices in Gallatin County,
as high rates reduce people’s purchasing power which puts downward pressure
on prices. Areas outside of Bozeman have seen drops in the median price, while
Bozeman had only minor appreciation.
X In Bozeman, the 2024 Q2 median price was up by 1.9% (to $784,500) over 2023
year end, versus a drop of 3.6% from 2022-2023 and an increase of 14.1% from
2021-2022.
X In Belgrade, the median price dropped by 4.4% to $579,000 from $605,700 at year
end 2023.
X In Greater Manhattan, the median price dropped by almost 12% to $650,000 from
$713,100 at year end 2023.
Multifamily vacancy rates
X The multifamily vacancy rate is currently approximately 9.9%, up from 7.1% in
2023 year-end. There were over 500 new units delivered in the first half of 2024
which likely caused this increase in the vacancy rate. We expect the vacancy rate to
stabilize based on continued job growth, and the pattern over the last five years of
vacancy rates increasing with new supply and then stabilizing over the next 6 to 12
months as new supply is absorbed.
X Despite the increase in vacancy rates, the average rent in Bozeman has increased
to $1,979 per month from $1,717 indicating continued housing demand.
Economic & Planning Systems, Inc 1
This report details the economic landscape of Bozeman and Gallatin County, Montana,
focusing on key growth trends, commercial real estate development, and housing
market dynamics Designed for economic developers, real estate developers, and investors,
lenders, and policymakers, the report aims to deliver crucial insights into regional growth
patterns, industry-specific economic advancements, wage trends, and housing demand
and affordability The purpose is to assist the community in tracking progress, identifying
trends, and recognizing potential challenges This 2024 edition is part of an annual series
that monitors and updates market conditions within the city and county
City Snapshot
Bozeman, home to 60,425 residents (Table 1), is located in Gallatin County (pop 132,441)
Bozeman is notable for its diverse economy, highly educated workforce, and exceptional
quality of life; a unique blend rarely found in small cities
Montana State University (MSU) is an anchor in the community and a strong research
institution with nearly 17,000 enrolled students and 3,600 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 a related
demand for more housing One of the most pressing issues for the City and greater
Bozeman area, is increasing the housing supply, as the median home price is currently
$784,500 up from $770,000 in 2023
Bozeman is one of
the fastest growing
cities in the U S ,
adding an estimated
24,000 residents
since 2010 or an
average of 1,713
residents per year
This translates to a
3 7 percent growth
rate, well above the
statewide average of
1 0 percent
1. City Snapshot and Summary
Economic & Planning Systems, Inc 1
Table 1. Population and Housing Units, 2010-2024
2010-2023
Description 2010 2015 2020 2023 Total Ann. #Ann. %
Population
Bozeman 36,440 40,319 53,293 60,425 23,985 1,713 3.7%
Belgrade 7,281 7,738 10,460 12,060 4,779 341 3.7%
Manhattan 1,396 1,191 2,086 2,243 847 61 3.4%
Other/Uninc.44,541 51,491 53,121 57,713 13,172 941 1.9%
Gallatin County 89,658 100,739 118,960 132,441 42,783 3,056 2.8%
Bozeman % of County Pop.40.6%40.0%44.8%45.6%56.1%
Housing Units
Bozeman 16,761 18,293 23,535 27,130 10,369 741 3.5%
Belgrade 3,154 3,308 4,339 5,029 1,875 134 3.4%
Manhattan 574 653 872 924 350 25 3.5%
Other/Uninc.20,841 23,715 24,089 25,893 5,052 361 1.6%
Gallatin County 41,330 45,969 52,835 58,976 17,646 1,260 2.6%
Bozeman % of County (HU)40.6%39.8%44.5%46%58.8%
Source: US Census; ESRI Business Analyst; Economic & Planning Systems
The majority of County residents live in an area along the I-90 corridor including and
surrounding Bozeman known as Gallatin Valley, also includes Manhattan, Belgrade, and
the Four Corners and Gallatin Gateway portions of unincorporated Gallatin County 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 2024Q2 Economic and Market Update
The Bozeman economy has eight key segments that distinguish it from other midsized
cities and recreation or resort-oriented mountain communities
•Higher Education – In 2023, Montana State University (MSU) had 16,978 students enrolled and roughly 3,600 faculty and staff MSU is one of 146 R1 research institutions with “very high research activity” within the Carnegie Classification of Institutions of Higher Education (Indiana University)
Table 2. MSU Enrollment, 2001-2023
2001-2023
Enrollment Trends 2001 2010 2015 2023 Total Ann. %
Undergraduate 10,538 11, 579 13,707 14,885 4,347 1.6%
Graduate 1,208 1,986 1,981 2,093 885 2.5%
Total 11,746 13,565 15,688 16,978 5,232 1.7%
Source: Montana State University; Economic & Planning Systems
•Tourism and Recreation – Bozeman serves as a “gateway community” to some of
the finest outdoor recreation spots in the world, including the Bridger Bowl and Big
Sky ski areas, Custer Gallatin Nation Forest, pristine rivers and streams, and the iconic
Yellowstone and Glacier National Parks The Bozeman Yellowstone International
Airport (BZN) plays a crucial role, having handled over 2 5 million passengers in 2023
Yellowstone National Park alone attracted 4 5 million visitors that year, marking the
second-highest attendance on record Many of these travelers pass through BZN and
Bozeman on route to Yellowstone, cementing the area’s status as an international
destination During peak seasons, the streets and restaurants of Bozeman become a
vibrant mosaic of cultures, with numerous foreign languages echoing through the air
•Health Care – Bozeman Health is a key healthcare hub in Southwest Montana,
employing approximately 2,400 people The recent redevelopment of the Gallatin
Valley Mall into the Gallatin Crossing campus has added new medical facilities,
including Intermountain Health and Ortho Montana This state-of-the-art facility
spans over 45,000 square feet and houses a team of 17 surgeons Additionally, there
are numerous other clinics and medical offices both surrounding the hospital and
scattered throughout Bozeman The Billings Clinic recently completed a new $30
million campus to provide critical trauma care
•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, Zoot Enterprises, and
numerous other 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, cryogenics, materials science, electronics, and aerospace, and even a
Gibson Guitar factory
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•Retail and Hospitality – Bozeman retailers serve at least a 50-mile trade area,
making it the premier retail, services, arts and entertainment, 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
Bozeman Yellowstone International Airport
In 2023, Bozeman Yellowstone International Airport (BZN) handled a record-breaking
2,464,325 passengers, marking an 8 8% increase from the previous year’s record of
2,264,424 BZN served as the choice for an estimated 43% of air travelers to or out of
Montana in 2023, solidifying its position as a crucial transportation hub in the state
BZN also plays a significant role in supporting the region’s tourism and recreation
economy, providing access to outdoor recreation, guide companies, and the Big Sky and
Bridger Bowl ski areas, as well as business travel Additionally, BZN offers direct flights to
numerous metropolitan destinations
4 Bozeman 2024Q2 Economic and Market Update
Comparison Cities
The presence of a major university, close proximity to outdoor recreation, significant
population growth in recent years, and a high quality of life make Bozeman comparable
to several other western cities, such as Missoula, MT; Fort Collins, CO; Boulder, CO; Bend,
OR and Billings, MT (Table 3)
Bozeman has the highest median household income of the Montana comparison cities—
Billings and Missoula—at $74,000 compared to $69,700 (Billings) and $59,800 (Missoula)
Among homeowners, Bozeman’s household income is considerable higher at nearly
$105,000 This is higher than in Billings, Missoula and Bend, but still below incomes in Fort
Collins and Boulder; this is expected given the larger economy in these cities
In each community, the number of students as a percentage of population is significant
In Bozeman, students equate to an estimated 28 1 percent of the population similar
to Boulder In Fort Collins, the largest of the comparison cities, the student population
equates to about 19 5 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
Economic & Planning Systems, Inc 5
Table 3. Peer City Summary
Description
Bozeman,
MT
Billings,
MT
Missoula,
MT
Fort Collins,
CO
Boulder,
CO
Bend,
OR
Demographics
Population 60,425 122,177 77,256 172,581 107,656 108,598
Median Age 29 39 36 33 31 40
% Renter Households 51.7%35.2%49.6%46.3%51.2%35.0%
Median Household Income
Owner $104,824 $86,396 $93,281 $119,910 $141,693 $104,026
Renter $56,715 $43,396 $42,479 $52,473 $45,189 $61,203
All Households $74,113 $69,692 $59,783 $78,977 $80,243 $82,671
County Employment1
# of Wage and Salary Jobs (2023)61,935 77,621 55,049 136,098 165,027 81,940
Top 3 Sectors
#1 Hotel/
Restaurant Health Care Health Care Retail Prof. and Tech.
Svcs.Health Care
#2 Retail Wholesale
Trade Retail Hotel/
Restaurant Health Care Retail
#3 Construction Hotel/
Restaurant
Hotel/
Restaurant Health Care Manufacturing Hotel/
Restaurant
Top 3 Growth Sectors (‘18-’23)
#1 Hotel/
Restaurant
Hotel/
Restaurant
Prof. and Tech.
Svcs.
Prof. and Tech.
Svcs.
Prof. and Tech.
Svcs.Health Care
#2 Health Care Health Care Health Care Health Care Manufacturing Prof. and
Tech. Svcs.
#3 Construction Construction Construction Wholesale
Trade
Wholesale
Trade Construction
Higher Education
Major Colleges/Universities
Montana
State
University
Montana
State
University
Billings
University of
Montana
Colorado
State
University
University
of Colorado
Oregon State
University-
Cascades
Enrollment (Fall 2023)16,976 4,092 9,995 33,648 37,153 1,313
% of Total Population 28.1%3.3%12.9%19.5%34.5%1.2%
Source: U.S. Census ACS 2022 5-year, QCEW, Economic & Planning Systems
1 Employment data is at the county level for wage and salary jobs only. There are closer to 100,000 total jobs in Gallatin County when self-employed and some government jobs are
included.
6 Bozeman 2024Q2 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) (Figure 2) The
largest employers in Bozeman, include Montana State University and Bozeman Health
Deaconess Regional Medical Center Large education and healthcare sectors (“eds” and
meds”) create economic stability and new firms Per the U S Bureau of Economic Analysis
(BEA), there were approximately 73,303 private wage and salary jobs in the County and
at least 105,000 total jobs including proprietors and government (including MSU), in
2022 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 industry1)
1 https://www.montanaphotonics.org/
Figure 2. Private Wage and Salary Employment, Bozeman and Gallatin County, 2023
2. Economy
Economic & Planning Systems, Inc 7
Between 2018 and 2023, Gallatin County added 11,741 private wage and salary jobs (4 3
percent per year), with Bozeman capturing approximately 42 percent of the growth
Employment growth in the county was driven by the following industries: Hotels &
Restaurants, Construction, Health Care, and Retail (Figure 3) Within Bozeman, the job
sectors that have added the most jobs since 2018 are Retail, Health Care, and Hotel &
Restaurants The State of Montana added 40,000 jobs from 2018-2023 Bozeman and
Gallatin County accounted for 30 percent of the state’s job growth
Figure 3. Private Employment Growth, Bozeman and Gallatin County, 2018-2023
2473
1599
1312
1200
1057
662
586
560
455
397
359
327
218
182
105
72
69
65
31
12
928
689
917
647
668
267
-57
212
-45
174
60
275
151
21
-27
7
46
-200 300 800 1300 1800 2300 2800
Hotel/ Restaurant
Construction
Health Care
Retail
Prof. & Tech. Services
Arts/ Rec
Real Estate
Admin/ Waste Mgmt
Wholesale Trade
Finance
Ag./ Forest/ Hunting
Other
Manufacturing
Education
Transportation
Unclassified
Information
Management
Mining/ Oil
Utilities
Total Jobs
Private Employment Growth, Bozeman and Gallatin County, 2018 -2023
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 1,460 jobs in
Bozeman There has
been a strong recovery
since the pandemic
and since 2021, Gallatin
County has added
roughly 11,200 jobs, 47 3
percent of which were
located in Bozeman
Figure 4. Annual Change in Private Employment, 2018-2023
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
2018-19 2019-20 2020-21 2021-22 2022-23
Change inEmployment
Annual Change in Private Employment, 2018-2023
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 2024Q2 Economic and Market Update
Unemployment rates in Bozeman and Gallatin County have steadily decreased since
2010, with a notable spike in 2020 due to COVID-19 (Figure 5) Since then, the rates have
rebounded, with current figures at 2 3 percent for Gallatin County and 2 2 percent for
Bozeman Although these rates have risen from the historical lows of 1 9 percent in the
County and 1 8 percent in Bozeman in 2022, this modest increase is beneficial Extremely
low unemployment can lead to adverse effects such as inflation, labor shortages, and
decreased productivity
Figure 5. Unemployment Rate, 2010-2024
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 2024 YTD
Unemployment Rate
Unemployment Rate, 2010-2024
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, 2023
DESCRIPTION
INDUSTRY/
EMPLOYMENT TYPE
NUMBER OF
EMPLOYEES
Bozeman Deaconess Hospital Health Care 1,000 and over
Big Sky Resort Ski Resort 500 to 999
Town & Country Foods Retail Trade 500 to 999
Bozeman Health Medical Group Health Care 250 to 499
Bridger Bowl Ski Resort 250 to 499
Costco Retail Trade 250 to 499
Kenyon Noble Lumber & Hardware Retail Trade 250 to 499
Lone Mountain Land Company Construction 250 to 499
Montage Big Sky Hotel/ Restaurant 250 to 499
Oracle America Technology 250 to 499
Ressler Motors Retail Trade 250 to 499
Town Pump Retail Trade 250 to 499
Wal Mart Retail Trade 250 to 499
Albertsons Retail Trade 100 to 249
Community Food Co-Op Retail Trade 100 to 249
Gibson Brands Manufacturing 100 to 249
Glacier Bancorp Finance/ Insurance 100 to 249
McDonalds Restaurant 100 to 249
Murdoch's Ranch & Home Supply Retail Trade 100 to 249
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 5 percent per year between 2018 and 2023
(Table 4) Inflation in the Bozeman market during this time period was 23 4 percent, or
approximately 4 7 percent annually
The fastest growing sectors in Gallatin County are Hospitality (including hotels and
restaurants), Construction, and Healthcare Since 2018, Hotels & Restaurants have
expanded significantly, adding 2,473 jobs In 2023, the average annual wage in this sector
reached $33,619, marking a 9 3 percent increase in the past five years Construction
also saw substantial growth, with 1,599 new jobs and an average wage of $74,839, an
increase of 6 4 percent over the same period Meanwhile, the Healthcare sector added
1,312 jobs, with an average wage of $62,386, reflecting a 5 0 percent increase since 2018
These trends highlight the dynamic economic development in Gallatin County, driven
by increased demand for services and infrastructure as the area continues to grow and
attract new residents The rising wages in these sectors not only indicate economic vitality
but also suggest a response by employers to high housing costs
Table 4. Job and Wage Growth, Top Sectors, Gallatin County, 2018-2023
2018-2023 Job
Growth 2018 Avg. Wage 2023 Avg. Wage
Annual Wage
Growth Description
All Jobs/Sectors 11,749 $43,572 $62,429 7.5%
Hotel/ Restaurant 2,473 $21,522 $33,619 9.3%
Construction 1,599 $54,990 $74,839 6.4%
Health Care 1,312 $48,894 $62,386 5.0%
Retail 1,200 $32,698 $45,997 7.1%
Prof. & Tech. Services 1,057 $72,413 $115,317 9.8%
Arts/ Recreation 662 $24,484 $32,536 5.9%
Source: Bureau of Labor Statistics QCEW; Economic & Planning Systems
Table 5. Changes in Jobs and Wages for Key Sectors, Gallatin County, 2018-2023
2019 2020 2021 2022 2023
Description Empl Wage Empl Wage Empl Wage Empl Wage Empl Wages
Actual Change
All Jobs/ Sectors 52,012 $45,615 50,673 $51,100 55,403 $54,801 58,482 $58,645 61,935 $62,429
Hotel/ Restaurant 8,178 $22,659 6 ,911 $24,329 8,239 $28,197 8,925 $30,528 10,380 $33,619
Construction 6,083 $56,908 6,401 $59,923 6,783 $65,210 6,956 $71,702 7,436 $74,839
Health Care 6,019 $52,018 5,993 $56,062 6,554 $54,144 6,901 $60,672 7,261 $62,386
Retail 8,329 $34,416 8,190 $37,987 8,814 $41,235 9,101 $44,516 9,338 $45,997
Prof. & Tech. Services 4,667 $75,359 4,828 $87,406 5,109 $88,177 5,272 $97,540 5,479 $115,317
Arts/ Recreation 1,579 $24,456 1,457 $28,552 1,647 $30,168 1,862 $32,649 2,095 $32,536
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
Description Empl Wage Empl Wage Empl Wage Empl Wage Empl Wages
Percentage Change
All Jobs/ Sectors 3.6%4.7%-2.6%12.0%9.3%7.2%5.6%7.0%5.9%6.5%
Hotel/ Restaurant 3.3%5.0%-15.5%7.4%19.2%15.9%8.3%8.3%16.3%10.1%
Construction 4.0%3.4%5.2%5.3%6.0%8.8%2.6%10.0%6.9%4.4%
Health Care 1.2%6.0%-0.4%7.8%9.4%-3.4%5.3%12.1%5.2%2.8%
Retail 2.3%5.0%-1.7%10.4%7.6%8.5%3.3%8.0%2.6%3.3%
Prof. & Tech. Services 5.2%3.9%3.4%16.0%5.8%0.9%3.2%10.6%3.9%18.2%
Arts/ Recreation 9.2%4.6%-7.7%16.7%13.0%5.7%13.1%8.2%12.5%-0.3%
Source: Bureau of Labor Statistics QCEW; Economic & Planning Systems
10 Bozeman 2024Q2 Economic and Market Update
Given that Hotels & Restaurants is the fastest-growing job sector in Gallatin County, it
is expected that the first wage quartile (the lowest 25 percent of earners) would see
substantial growth Of the 11,741 jobs added between 2018 and 2023, 4,844, or 41 percent,
were in this quartile, with annual wages at or below approximately $52,000, equivalent to
$25 per hour (Figure 6)
The second quartile, representing the next 25 percent of wage earners with annual
salaries between $53,000 and $65,000, accounts for 22 percent of the jobs added This
wage bracket typically includes positions in Manufacturing, Administrative Services,
Healthcare or Social Services, and Agriculture The third quartile, covering the 50th to
75th percentile with salaries ranging from $65,000 to $91,000, contributed 24 percent of
the new jobs, with roles in sectors such as Mining, Management, Construction, and Real
Estate The fourth quartile, which includes the highest wage earners earning over $91,000
annually, added the fewest jobs, comprising 13 percent of the total This quartile typically
includes positions in Information Technology, Professional and Technical Services, Utilities,
and Finance
Figure 6. Change in Employment by Wage Quartile, Gallatin County, 2018-2023
Economic & Planning Systems, Inc 11
Workforce
The regional workforce is highly skilled and well educated Approximately 63 3 percent
of Bozeman’s workforce has a bachelor’s degree or higher (Table 6) Of its peer cities,
only Boulder, CO exceeds Bozeman in this ranking, with 79 2 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, 2023
Education Level Bozeman Billings Boulder Bend
Fort
Collins Missoula
Population 25+37,126 85,044 66,313 78,297 112,463 53,942
High School or Less, No Diploma 2.3%4.3%2.4%3.7%2.7%3.7%
High School Graduate or Equivalent 12.9%28.9%5.7%16.1%13.9%18.4%
Some College, No Degree 15.1%20.3%8.4%19.4%14.1%18.5%
Associate's Degree 6.4%8.5%4.3%10.7%8.7%8.7%
Bachelor's Degree 39.5%26.2%39.4%30.0%36.1%32.0%
Graduate/ Professional Degree 23.8%11.7%39.8%20.1%24.6%18.8%
Total 100%100%100%100%100%100%
Bachelor’s Degree or Higher 63.3%37.9%79.2%50.1%60.7%50.7%
Source: U.S. Census; ESRI Business Analyst; Economic & Planning Systems
12 Bozeman 2024Q2 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 CoStar
relies on broker-reported data and as a result, it frequently updates its information, and
historical data may change as more detailed information becomes available
Office Market Trends
From 2010 to the second quarter of 2024, Gallatin County’s office space grew by
approximately 1 03 million square feet, averaging roughly 76,000 square feet annually
This growth trend has continued recently, with an estimated 184,000 square feet added
from 2020 Net inventory growth is calculated by subtracting demolitions or conversions
from new construction (Table 7) Bozeman is the central hub for office space with Gallatin
County, holding 80 3 percent of the entire county’s current office inventory Since 2010
Bozeman has captured 74 4 percent of new office construction in Gallatin County, and
88 1 percent of the new office construction in the county since 2020
Average office lease rates in Bozeman have more than doubled since 2010, rising from
$11 71 to $26 25 per square foot, reflecting a 6 2 percent annual increase Over the past
decade, office vacancy rates in Gallatin County and Bozeman have consistently stayed
below 4 0 percent Currently, vacancy rates are 3 2 percent in Bozeman and 3 0 percent in
Gallatin County This combination of rising lease rates and low vacancy rates underscores
the strong demand for office space in the area, indicating a thriving and expanding
commercial real estate market
Data on office construction, or “deliveries,” can offer more detailed insights into market
activity From 2010 to Q2 2024, 74 0 percent of all new office space in Gallatin County
was delivered within Bozeman’s
city limits Since 2020, this figure
has risen to 84 2 percent (Figure
7) This concentration of new office
development highlights Bozeman’s
growing role as the primary center
for office space in the county,
reflecting its increasing economic
vitality and appeal to businesses
3. Commercial Real Estate
Economic & Planning Systems, Inc 13
Table 7. Office Summary , 2010-2024 Q2
Description 2010 2020 2021 2022 2023 2024 Q2
Inventory
Bozeman 2,434,168 3,038,994 3,066,863 3,176,076 3,191,686 3,201,088
Gallatin County 2,955,324 3,801,987 3,829,856 3,940,459 3,980,069 3,986,069
Bozeman as Pct. of County 82.4%79.9%80.1%80.6%80.2%80.3%
Avg. Rent
Bozeman $11.71 $21.61 $21.63 $22.92 $25.20 $26.25
Gallatin County $11.78 $20.98 $20.97 $22.30 $24.74 $25.69
Avg. Vacancy
Bozeman 3.0%2.7%3.0%1.6%3.4%3.2%
Gallatin County 2.8%2.4%2.6%1.4%3.1%3.0%
Figure 7. Office Deliveries, 2010-2024 Q2
Change 2010-2024 Q2 Change 2020-2024 Q2
Description Total Ann. #Ann. %Total Ann. #Ann. %
Inventory
Bozeman 766,920 56,809 2.0%162,094 46,313 1.5%
Gallatin County 1,030,745 76,351 2.2%184,082 52,595 1.4%
Pct. of County 74.4%88.1%
Avg. Rent
Bozeman $14.55 $1.08 6.2%$4.64 $1.33 5.7%
Gallatin County $13.91 $1.03 5.9%$4.71 $1.35 6.0%
Source: CoStar; Economic & Planning Systems
14 Bozeman 2024Q2 Economic and Market Update
Some notable office and office/mixed use projects built since 2022 are listed below (Table
8) These newer buildings have higher rents averaging almost $32 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
Aspen Crossing 505 W Aspen St 2022 64,000 ---
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
The Oz 2952 Technology Blvd W 2023 15,610 $32.60
1450 Twin Lakes Ave - Building I 1450 Twin Lakes Ave 2023 24,000 $40.59
4351 Fallon St 4351 Fallon St 2024 6,000 $27.00
Total/Weighted Average 156,213 $33.12
Source: CoStar; Economic & Planning Systems
Notable Project
Mountain View – Located
at the intersection of N
Tracy and W Lamme
Street, in the North Central
Development area of
Downtown Bozeman,
Mountain View will feature
up to 100,000 square
feet of new Class A office
space and 15,000 square
feet of ground-floor
retail Additionally, the
upper floors will have 30
residential, for sale units,
including a mix of 1- and
2-bedroom condos
Photo Courtesy: CoStar
Economic & Planning Systems, Inc 15
Industrial/Flex Market
Between 2010 and Q2 2024, industrial space in Gallatin County grew by roughly 970,000
square feet, averaging 72,000 square feet per year (Table 9) Bozeman contributed only
3 3 percent of this growth, with industrial expansion there slowing significantly Since
2020, Bozeman has added roughly 4,280 square feet of new industrial or flex space,
averaging about 1,200 square feet per year In contrast, the rest of the county added
333,500 square feet during the same period, with Bozeman’s market share of this growth
at just 1 3 percent Lower land costs outside Bozeman, particularly in Four Corners and
Belgrade, are driving industrial growth in these areas Nevertheless, Bozeman remains
a key location for higher-value industrial uses and flex/R&D space due to its strategic
location and robust infrastructure
Since 2010, Gallatin County’s rental rates have risen by 4 6% annually, while Bozeman’s
rates have declined by 1 3% per year As of Q2 2024, CoStar reports industrial rents in
Bozeman at $9 00 per square foot, compared to $13 18 in the rest of the county Despite
these differences, both Bozeman and the county have maintained low vacancy rates,
currently 0 9% in Bozeman and 2 3% in the county, suggesting demand for more
industrial and flex space
Table 9. Industrial/Flex Summary, 2010-2024 Q2
Description 2010 2020 2021 2022 2023 2024 Q2
Inventory
Bozeman 967,192 995,386 995,386 995,386 997,905 999,666
Gallatin County 3,395,253 4,031,339 4,081,955 4,096,955 4,332,862 4,364,839
Bozeman as Pct. of County 28.5%24.7%24.4%24.3%23.0%22.9%
Avg. Rent
Bozeman $10.67 $17.44 $22.32 $21.14 $15.81 $9.00
Gallatin County $7.20 $12.73 $14.04 $16.90 $14.50 $13.18
Avg. Vacancy
Bozeman 1.2%2.0%0.1%2.9%1.7%0.9%
Gallatin County 2.6%1.4%0.6%1.0%1.6%2.3%
Change 2010-2024 Q2 Change 2020-2024 Q2
Description Total Ann. #Ann. %Total Ann. #Ann. %
Inventory
Bozeman 32,474 2,405 0.2%4,280 1,223 0.1%
Gallatin County 969,586 71,821 1.9%333,500 95,286 2.3%
Pct. of County 3.3%1.3%
Avg. Rent
Bozeman -$1.67 -$0.12 -1.3%-$8.44 -$2.41 -17.2%
Gallatin County $5.98 $0.44 4.6%$0.45 $0.13 1.0%
Source: CoStar; Economic & Planning Systems
16 Bozeman 2024Q2 Economic and Market Update
There is a gap in the flex and R&D market as there is not enough lab and wet lab space
to support the nascent bioscience sector These buildings are difficult to be built
speculatively
In Gallatin County, 804,315 square feet of industrial space were delivered since 2010
(Figure 8) Of these deliveries, 7 1 percent were built in Bozeman
Figure 8. Industrial Deliveries, 2010-2024 Q2
The majority of recent industrial and flex construction in the area has been outside the
city in the Four Corners area of Gallatin County (Table 10)
Table 10. Recent Industrial/Flex Projects
Description Address Region
Year
Built RBA
Avg Rent
per sq. ft.
Notable Deliveries
BZ Materials 125-127 Ginger Bear Ln Four Corners 2022 6,109 $6.64
Revive Salon, Aurore Bakery,
Hybrid Motion, LLC 141 Baxter Lane West Four Corners 2023 34,000 $6.24
Swiss Plaza Condo 2994-3016 N 27th Ave Bozeman 2023 2,494 $5.78
7401 Shedhorn Flex/Warehousing 7401 Shedhorn Dr Four Corners 2024 18,830 $18.00
Total/Weighted Average Four Corners 61,433 $9.87
Source: CoStar; Economic & Planning Systems
Economic & Planning Systems, Inc 17
Notable Projects
North Loop Rail Served Industrial Park –
A 250-acre area in north Bozeman, located
east of I-90 and west of Frontage Road, is
undergoing significant development The
Phase I infrastructure is now complete, with
three parcels officially closed These parcels
will house a large-scale building supply
company and a Wyndham ECHO economy
extended-stay hotel Additional planned
uses include a 520-unit workforce housing
community, a 150,000-square-foot modular
manufacturing facility, and three Class A
industrial warehouse/distribution buildings
totaling 287,000 square feet Phase II consists
of three tracts totaling 36 11 acres, zoned for
rail-served industrial use
Nelson Meadows Business Park – This
master planned commercial subdivision
located in northwest Bozeman, at the
corner of Nelson Road and Frontage Road,
is currently under construction The site is
comprised of 27 building lots that vary in
size from 0 7 acres to 5 27 acres This prime
location for businesses will connect Bozeman
to Yellowstone International Airport, offering
unparalleled visibility from I-90 and Frontage
Road, just west of the 19th Ave interchange,
and will be serviced by city utilities
18 Bozeman 2024Q2 Economic and Market Update
Retail Market
Bozeman is the regional trade hub for Southwest Montana and serves a roughly 50-mile
radius Gallatin County has an estimated 6 5 million square feet of retail inventory, 71 8
percent or 4 67 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 59 per square foot,
and $20 67 per square foot respectively Retail rents grew slowly at about 2 6 percent per
year in Gallatin County, and by only 0 8 percent per year in Bozeman from 2010 to present
day Vacancy rates for retail space in Bozeman and Gallatin County have been notably low
since 2010 and are currently 1 9 and 1 5 percent respectively
Table 11. Retail Summary, 2010-2024 Q2
Description 2010 2020 2021 2022 2023 2024 Q2
Inventory
Bozeman 4,231,243 4,540,908 4,611,908 4,643,626 4,665,626 4,665,626
Gallatin County 5,841,515 6,314,130 6,385,130 6,416,848 6,502,103 6,502,103
Bozeman as Pct. of County 72.4%71.9%72.2%72.4%71.8%71.8%
Avg. Rent
Bozeman $17.57 $20.35 $21.18 $21.32 $20.01 $19.59
Gallatin County $14.63 $20.23 $21.38 $21.23 $19.83 $20.67
Avg. Vacancy
Bozeman 1.8%2.3%1.6%1.5%1.3%1.9%
Gallatin County 2.0%2.1%1.5%1.2%1.1%1.5%
Change 2010-2024 Q2 Change 2020-2024 Q2
Description Total Ann. #Ann. %Total Ann. #Ann. %
Inventory
Bozeman 434,383 32,177 0.7%124,718 35,634 0.8%
Gallatin County 660,588 48,932 0.8%187,973 53,707 0.8%
Pct. of County 65.8%66.3%
Avg. Rent
Bozeman $2.03 $0.15 0.8%-$0.75 -$0.22 -1.1%
Gallatin County $6.04 $0.45 2.6%$0.45 $0.13 0.6%
Source: CoStar; Economic & Planning Systems
Economic & Planning Systems, Inc 19
Between 2010 and Q2 2024, Bozeman delivered roughly 631,000 square feet of retail space
(Figure 9) or 52,578 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
79 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, 2010-2024 Q2
Table 12. Recent Retail Projects, Bozeman
Description Address Year Built RBA
Avg Rent
per sq. ft.
Notable Deliveries
WinCo Foods 2913 Max Ave 2021 75,000 ---
Whole Foods 2905 W Main St 2022 31,718 $24.36
Total/Average 106,718 $24.36
Source: CoStar; Economic & Planning Systems
20 Bozeman 2024Q2 Economic and Market Update
Bozeman’s retail inventory is comprised of a wide variety of national grocery chains, big
box retailers, and smaller local stores There are 10 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
WinCo Foods 75,000 Macy's 51,828
Rosauers Foods & Drug Center 60,045 Sportsman's Warehouse 44,018
Safeway 56,117 Hobby Lobby 41,796
Smith's 55,000 Bob Ward's Sports & Outdoors 30,495
Albertsons 53,746 Ross Dress For Less 30,130
Whole Foods Market 31,718 REI 25,177
Town and Country Foods 26,449 Barnes & Noble 25,000
Town and Country Foods 20,404 Joann 25,000
Building Material and Garden Staples 22,194
Lowe’s 99,440 T.J. Maxx 21,064
The Home Depot 95,337 Michaels 20,372
Kenyon Noble Lumber and Hardware 57,375 Universal Athletic 20,000
Murdoch's Ranch & Home Supply 48,904
Ashley HomeStore 30,800
Ace Hardware 24,302
Commercial Metals 24,275
Harbor Freight Tools 19,582
Source: CoStar; Economic & Planning Systems
Economic & Planning Systems, Inc 21
Notable Projects
Gallatin Crossing – The
redevelopment of the
Gallatin Valley Mall,
rebranded as Gallatin
Crossing, is a significant
retail repositioning project
currently in progress
Notably, new tenants
that opened in 2023 are
Whole Foods Market,
Intermountain Health (previously SCL Health), and a J Crew Factory store
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
Ferguson Farm is a
commercial district
covering approximately
50 acres on Bozeman’s
west side, located at
the intersection of S
Cottonwood and Huffine
(U S 191) Phase I, which is
now complete, includes
the Icon Apartments,
a 336-unit residential
complex; Schedulicity,
a global company
headquartered in
Bozeman; and The Market,
a 21,000-square-foot food
hall featuring specialty retailers Phase II is planned for an additional 31 acres east of the
existing phase, with the potential to accommodate 850,000 square feet of commercial
space, including a hotel
Block 3x – Block 3X, part of the North Central development, will feature four commercial
buildings between W Beall and W Villard Street Designed with pedestrian alleys,
courtyards, and green spaces, it aims to become a vibrant hub for dining, shopping,
working, art walks, and festivals The developer also plans for up to 200 residential units
available for lease
Photo Courtesy: Bozeman Real Estate Group
22 Bozeman 2024Q2 Economic and Market Update
This chapter provides an overview of the housing market in Bozeman, including an
analysis of building permit trends, home prices, the rental market, and key indicators
of housing affordability More detail can be found in the Gallatin County Housing Needs
Assessment
Construction
Bozeman’s housing market has
seen strong, continuous growth
in recent years The City has
issued an average of 1,161 permits
each year since 2018 (Table 13)
From 2018 to the end of 2023,
multifamily residences - including
apartments and condominiums -
have accounted for 54 4 percent of
housing construction in Bozeman
Single-family attached housing, such
as townhomes, duplexes, triplexes,
and fourplexes, has been the second-
largest contributor, representing
26 8 percent of new construction Meanwhile, single-family detached homes have made
up 16 9 percent of the new construction, with a total of 1,180 units added since 2018 The
remaining 1 9 percent of new dwelling units consists of accessory dwelling units (ADUs)
Table 13. Bozeman Permit Trends, 2018-2023
2018-2023
Description 2018 2019 2020 2021 2022 2023 Total Avg.%
Single Family 299 217 197 195 116 156 1,180 197 16.9%
Duplex 92 98 94 106 40 152 582 97 8.4%
Triplex 45 33 42 39 51 87 297 50 4.3%
Fourplex 136 84 88 92 68 100 568 95 8.2%
Detached Accessory
Dwelling Unit 20 28 9 25 26 22 130 22 1.9%
Multifamily / Condo 593 546 734 866 337 714 3,790 632 54.4%
Townhome 66 95 81 60 81 37 420 70 6.0%
Total 1,251 1,101 1,245 1,383 719 1,268 6,967 1,161 100.0%
Source: City of Bozeman; Economic & Planning Systems
4. Housing
Economic & Planning Systems, Inc 23
Housing Prices
Bozeman continues to have strong home price appreciation even in the higher interest
rate climate, with the current median price for a single-family residence at $784,500 The
most significant year-over-year increase occurred between 2020 and 2021, with a nearly
30 percent rise (Table 14) This rapid appreciation is partly attributed to amenity migration
from large metropolitan areas during the COVID-19 pandemic Since 2016, Bozeman has
seen an average annual increase of 11 percent in median sale prices Similarly, surrounding
communities and the entire county have witnessed comparable trends, with prices
effectively doubling over the past six years Other areas saw some declines in the median
price
This sharp price increase poses challenges for affordability, workforce attraction and
retention, and overall quality of life For investors, it signals strong demand, limited supply,
and opportunities for development in a robust market The City is exploring ways to
responsibly expand housing supply while preserving community health and wellbeing
The City has incentives for affordable and workforce housing up to 120 percent of AMI
including:
•Funding for gap closure;
•Density bonus program;
•Tax increment financing through its comprehensive urban renewal program
Table 14. Home Price Trends, 2019-2024 Q2
2019-2024 Q2
Description 2019 2020 2021 2022 2023 2024 Q2 Total
Ann.
%
Median Sales Price
Bozeman $460,000 $540,000 $700,000 $799,000 $770,000 $784,500 $324,500 12.6%
Belgrade $340,950 $375,000 $535,000 $577,720 $605,700 $579,000 $238,050 12.5%
Greater Manhattan $416,000 $564,750 $640,000 $737,500 $713,100 $650,000 $234,000 10.4%
Gallatin County $397,500 $439,900 $685,000 $790,000 $792,000 $820,000 $422,500 17.5%
YOY % Change
Bozeman 7.6%17.4%29.6%14.1%-3.6%1.9%
Belgrade 6.5%10.0%42.7%8.0%4.8%-4.4%
Greater Manhattan 6.9%35.8%13.3%15.2%-3.3%-8.8%
Gallatin County 6.1%10.7%55.7%15.3%0.3%3.5%
Source: Gallatin Association of Realtors; Economic & Planning Systems
24 Bozeman 2024Q2 Economic and Market Update
Apartment Market
In Q2 2024, Bozeman had 6,036 apartment units in its inventory (Table 15) Since 2020, the
city has added an average of 493 apartment units per year These totals account only for
units in apartment buildings and exclude other types of rented homes This means that
78 5 percent of the multifamily inventory in Gallatin County is within Bozeman’s city limits,
as tracked by CoStar From 2010 to Q2 2024, Bozeman delivered 3,448 apartment units
(Figure 10), which is 84 5 percent of the added growth during that time in Gallatin County
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 9 9 percent While Bozeman’s current vacancy rate is up significantly compared
to 2020, given that Bozeman just delivered an estimated 550 units to the market in the
first half of 2024, it is likely that these rates will normalize by the end of the year based on
strong job growth and past patterns in the vacancy rate
Table 15. Multifamily Summary, 2010-2024 Q2
Description 2010 2020 2021 2022 2023 2024 Q2
Inventory
Bozeman 2,588 4,312 4,495 5,010 5,486 6,036
Gallatin County 3,609 5,409 5,593 6,276 7,141 7,691
Bozeman as Pct. of County 71.7%79.7%80.4%79.8%76.8%78.5%
Avg. Rent
Bozeman $1,455 $1,717 $1,847 $1,968 $1,989 $1,979
Gallatin County $1,474 $1,735 $1,860 $1,979 $1,988 $1,971
Avg. Vacancy
Bozeman 5.7%5.8%4.0%4.9%7.1%9.9%
Gallatin County 5.3%4.9%3.6%4.9%9.3%11.2%
Change 2010-2024 Q2 Change 2020-2024 Q2
Description Total Ann. #Ann. %Total Ann. #Ann. %
Inventory
Bozeman 3,448 255 6.5%1,724 493 10.1%
Gallatin County 4,082 302 5.8%2,282 652 10.6%
Pct. of County 84.5%75.5%
Avg. Rent
Bozeman $523.75 $38.80 2.3%$261.25 $74.64 4.1%
Gallatin County $497.50 $36.85 2.2%$235.75 $67.36 3.7%
Source: CoStar; Economic & Planning Systems
Economic & Planning Systems, Inc 25
Notable Projects
From 2023 to the second quarter of 2024,
Bozeman delivered eight major (50+ units)
apartment buildings, seven of which are
market rate and one rent restricted The
sole rent restricted apartment building,
The Annex of Bozeman, has a total of 134
units, and an average effective rent of
$2,207 per unit It combines workforce
rental housing, and student housing with
rents restricted to households earning
between 80 and 120 percent of AMI
Of the market rate apartments, average
rents range from $1,898 to $2,906 per unit
The largest of these apartment buildings
with 326 units, Northwest Crossing, built in
2024, has an average rent of $2,455 and an
average unit size of 1,082 square feet Built
in 2023, the second largest building, with
268 units, The Oxbow has an average rent
of $2,278 per unit and an average unit size
of 887 square feet And the third largest
building, built in 2024, is The Edison at
Bozeman Gateway This building consists
of 231 units, with an average rent of $2,273
and an average size of 858 square feet
Figure 10. Multifamily Deliveries, 2010-2024 Q2
Northwest Crossing
The Oxbow
The Edison at Bozeman Gateway
26 Bozeman 2024Q2 Economic and Market Update
Table 16. Recent Multifamily Development, Bozeman
Notable Deliveries Address
Year
Built Units
Avg. Rent /
Mo.
Market Rate
Northwest Crossing 1595 Twin Lakes Ave 2024 326 $2,455
The Oxbow 4650 W Garfield St 2023 268 $2,278
The Edison at Bozeman Gateway 3100 Technology Blvd W 2024 231 $2,273
Avion Apartments 2235 Tschache Ln 2024 216 $1,898
19th and Graf Apartment Homes 2900 S 21st Ave 2023 195 $2,353
Blackwood Cottages 1502 Scotch Pine Ln 2023 121 $2,906
Haymaker 1624 W Babcock St 2023 95 $2,191
7th and Aspen
(mixed income, under construction)7th Ave and Aspen St --96 $1,440
Bronkens
(mixed income, under construction)707 E. Peach Street --110 $2,765
Total/Weighted Average 1,658 $2,296
Affordable/Rent Subsidized
The Annex of Bozeman 1800 22nd St 2023 134 $2,207
Timber Ridge Apartments 2725 Tschache Ln 2023 30 $928
North 3rd (under construction)North 3rd btwn W Peach
& Tamarack --216 $1,428
Total/Weighted Average 380 $1,663
Source: CoStar; Economic & Planning Systems
7th and Aspen – Located on 7th Avenue
between Aspen Street and West Peach
Street, 7th and Aspen is a two-phase
project that is proposing 96 affordable
housing units Phase 1 is an affordable
rental development utilizing the federal
Low Income Housing Tax Credit (LIHTC)
program Phase 1 includes 46 units with
17 units at 50% AMI and 29 units at 60%
AMI Phase 2 has 50 units that are income-
restricted to 80% AMI for 30 years Rents for Phase 1 are projected to range from $986 per
month for a 1-bedroom unit to $1,368 per month for a 3-bedroom unit Rents for Phase 2
are projected to range from $1,683 per month for a 1-bedroom unit to $2,103 per month for
a 3-bedroom unit
North 3rd – Located on North 3rd Avenue
between West Peach Street and West
Tamarack Street, North 3rd is a 216-unit
affordable housing project that recently
began construction in early 2024 All 216
units are income-restricted to 60% AMI The
project consists of 80 1-bedroom units, 84
2-bedroom units, 48 3-bedroom units, and
4 4-bedroom units Rents are projected
to range from $1,226 per month for a
1-bedroom unit to $1,856 per month for a 4-bedroom unit
Economic & Planning Systems, Inc 27
Bronkens – Located at 707
East Peach Street, Bronkens
is a project that involves
the redevelopment of a 2 1-
acre site formerly utilized
for beverage distribution
The project will contain 110
housing units including 42
1-bedroom townhome units
and 68 multifamily units The
multifamily units will include
46 market rate 1-bedroom
units, eight market rate
2-bedroom units, 11
affordable 1-bedroom
units at 80% AMI, and three affordable 1-bedroom units at 120% AMI Rents are projected
to range from $1,590 per month for an affordable 1-bedroom unit to $3,500 per month for
a market rate 2-bedroom unit
Photo Courtesy: Bozeman Real Estate Group
28 Bozeman 2024Q2 Economic and Market Update
Affordability
The rapid rise in housing prices and interest rates has made it difficult for many people
to enter the market In 2019, a household earning approximately 116 percent of the HUD
area median income (AMI) could afford the median-priced home Today, a household
would need to earn 208 percent of the AMI to afford the current median home price of
$784,500 This significant price increase is driven by a combination of limited housing
inventory, rising construction costs, and an influx of people moving to the area during the
pandemic Increasing the housing supply will be crucial in addressing the shortage of
affordable and workforce housing
Table 17. Required Annual Income to Afford Median Home Price, 2019-2024 Q2
Bozeman Factor 2019 2020 2021 2022 2023 2024 Q2
Median Home Price $460,000 $540,000 $700,000 $799,000 $770,000 $784,500
Mortgaged Amount
(less: downpayment)5.0%
down pmt $437,000 $513,000 $665,000 $759,050 $731,500 $745,275
Mortgage Interest Rate 3.9% int.3.1% int.3.0% int.5.3% int.6.6% int.6.8% int.
Loan Term 30-years 30-years 30-years 30-years 30-years 30-years
Monthly Costs
Mortgage Payment (Monthly)$2,061 $2,191 $2,804 $4,215 $4,672 $4,859
Less: Insurance $1,500/
Year $125 $125 $125 $125 $125 $125
Less: Property Taxes 1.0%$383 $450 $583 $666 $642 $654
Less: Miscellaneous $500/
Year $42 $42 $42 $42 $42 $42
Total Monthly Housing Costs $2,611 $2,807 $3,554 $5,048 $5,480 $5,679
Required Annual Income 30%$104,448 $112,290 $142,147 $201,902 $219,205 $227,162
100% AMI for Family of 4 $90,300 $90,400 $88,900 $104,700 $126,400 $109,000
AMI for Family of 4 116%124%160%193%173%208%
[1] rounded to nearest major AMI category
Source: US Census; Economic & Planning Systems
Economic & Planning Systems, Inc 29
In 2016 the income levels needed to afford the median priced home were at 100 to 120
percent of AMI (Figure 11) In 2024 there are income gaps at all levels of AMI Households
earning 180 percent of AMI ($196,200) would still need to earn another $30,962 per year to
afford the median priced home (Figure 12)
Figure 11. Income Gap to Afford Median Priced Home, Bozeman, 2019
$59,360
$74,200 $89,040
$111,300
$133,560
$45,088
$30,248
$15,408
$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
$104,448 Income Required to Afford Median Home Price (2019)
Z:\Shared\Projects\DEN\233070 Bozeman 2023 Market Update\Models\2024 Update\[233070-Income Affordability.xlsx]T-AMIGap
Figure 12. Income Gap to Afford Median Priced Home, Bozeman, 2024
$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%Household IncomeAMI (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
30 Bozeman 2024Q2 Economic and Market Update
Housing Demand
In this section, a housing demand projection is presented to guide the City and real estate
stakeholders on the anticipated growth and housing needs in Bozeman The projection
connects job growth with housing demand, estimating that approximately 1,100 housing
units are required annually (Table 18) to match a forecasted job growth rate of 2 0 percent
per year, a more conservative projection compared to the 4 3 percent annual growth
experienced over the past five years To keep up with job growth, there needs to be at
least 800 new housing units constructed in the city each year
However, there are additional strong market demand drivers to consider We have added
25 percent to the demand forecast to account for part-time residents (12 5%) and remote
workers not counted in local jobs data (12 5%) These factors add about 300 more units to
the demand projection increasing it to 1,100 units per year (Table 18)
The expected mix of construction over the next 10 years is based on the past 10 year
construction activity We estimate that about 20 percent of the construction will be in
single family detached homes, another 25 percent in “missing middle” types including
townhomes, duplexes-fourplexes, and ADUs The majority of construction has been
in multifamily condominiums and apartments, which we project to be 55 percent of
construction going forward (Table 19)
Table 18. Bozeman Housing Demand Projection
2023-2033
Description Factor 2023 2033 Total Annual
Total Jobs - Gallatin County 2.0%110,000 134,100 24,100 2,410
Less: Proprietor Jobs Overcount [1]-10.0%-11,000 -13,410 -2,410 -241
Employed People 1.10 jobs/empl.90,000 109,718 19,718 1,972
Employed Households 1.30 jobs/household 69,230 84,400 15,170 1,517
Normal Vacancy Adjustment 5%3,640 4,440
Housing Units - Gallatin County 72,870 88,840 15,970 1,597
Baseline Demand - Bozeman
Bozeman Market Share 50.0%36,440 44,420 7,980 798
Other Market Influences
Part Time Residence Adjustment 10%939
In-migration and remote worker adjustment 10%1,104
Total Adjustment 30%
[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 2024-2028 2029-2033 Total Annual
New Unit Demand in Bozeman 1,104/yr.5,522 5,522 11,045 1,104
Bozeman Construction Projection
Single Family (Detached)20.0%1,104 1,104 3,209 221
Townhome/Triplex/Duplex 25.0%1,381 1,381 2,761 276
Multifamily 55.0%3,037 3,037 6,075 607
Total 100.0%4,926 4,926 11,045 1,104
[1] Mobile homes and other miscellaneous housing types are not included
Source: Economic & Planning Systems
Economic & Planning Systems, Inc 31