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The Billings commercial real estate market suddenly gained momentum last fall after enduring an otherwise flat year in 2011, “even though the economy was pretty darn good,” reported Commercial Realtor Al Koelzer of NAI Business Properties, a panel speaker at the Montana Economic Outlook Seminar.

The impetus to the turnaround seemed to have been the sale of a property to Sanjel, an oil company engaged in the Bakken seeking space for training employees and maintaining equipment in Billings. Since then things have been hopping, especially as far as warehouse space goes, according to Koelzer .

And, all of the major transactions, with which Koelzer’s office has been involved, have been with companies either directly working in the Bakken, or companies which are growing because of business that is coming from the Bakken.

Koelzer stated that “It’s all about the Bakken,” and “If you and your company aren’t doing something in relation to the Bakken, you are stupid.”

There are “getters and losers,” when it comes to warehouse space in Billings right now, said Koelzer. If four people are looking at a space, one gets it, and the other three lose. The competition hasn’t really affected prices, yet.

The really exciting news, as far as Koelzer, is concerned, is the demand for space to accommodate truck shops, fabrication facilities, and heavy duty space for different kinds of manufacturing. Activity in this sector is the starting point for economic activity which will impact other sectors.

Since last fall, “we have rented or sold over 100,000 square feet of shops, warehouses and fabrication buildings, and that’s all new jobs,” declared Koelzer. The status of warehouse space in Billings is dramatically lower than it was in 2010 – total space stands at less than 300,000 square feet compared to a peak of some 672,000 square feet in 2010.

That improvement in the market must be contrasted with how things were in Billings in 2008. It’s about a third of the volume that Koelzer’s office experienced from the peak.

The market activity is carrying over now to other commercial real estate, said Koelzer.

“The retail market is getting better. We are renting some office spaces, and we are starting to see some land sales and some construction of new buildings.”

There have been “few to no” bank repositions of office buildings or commercial properties, despite deep concerns a couple years ago, about the possibility of the commercial real estate market following the residential market decline.

And, financing for companies wanting to build seems not to be a problem. “We aren’t seeing deals fall through because of lack of financing,” said Koelzer, “but most of the people are financially fit. And, low interest rates help make the deals work, if they can qualify. We have no complaints against the banks.”

The vacancy rate of retail space across the city has declined… from 9 percent in 2010 to 6.5 percent in 2011, even with a slight increase in total available space. Every area in the city has had an increase in demand for retail space, even with some increase in available space.

Office space is still plentiful throughout the city, however. “There aren’t that many people looking for office space,” said Koelzer. Vacant office space on the westend has increased “a little bit” – up from 8.72 percent vacancy 2011 to 12.35 percent, now. Vacancy in Class A – more premium – office space has also increased but so has the total available space. The vacancy rate climbed from 7.3 percent in 2011 to 12.73 percent currently, which includes an increase in square footage from 630,308 to 743,756.

Demand for space in the downtown Billings area is increasing and the vacancy rate has been trending downward from 14.07 percent in 2010 to 8.56 percent currently.

Available space in the Heights has, also, decreased from almost 15 percent vacancy in 2010 to about 5 percent now, even with an increase in “gross area” available.