Montana Sapphire subdivision takes off

2012-03-06T00:00:00Z 2014-08-25T16:15:37Z Montana Sapphire subdivision takes offBy JAN FALSTAD jfalstad@billingsgazette.com The Billings Gazette

The Montana Sapphire subdivision at King Avenue West and Shiloh Road has languished through a decade of slow growth, while its rival across the street, Shiloh Crossing, is booming.

Now Montana Sapphire finally has several big projects under way.

"It's been a long wait, but I think the time has come for the Montana Sapphire subdivision. It's a hopping development," George Warmer said. He and Blaine Poppler at Coldwell Banker Commercial represent the subdivision owned by former car dealer Bert Arnlund.

Among the major projects:

-- Site work and preliminary framing is under way for 168 apartments along Montana Sapphire Drive.

-- Rimrock Auto Group's co-owners plan to build two or three more dealerships just south of the Volkswagen dealership. This is in addition to the VW dealership at the corner of Shiloh and King, which will open May 1.

-- Cellular Plus is building another Verizon Wireless store just west of McDonald's in Shiloh Crossing.

-- Offers have been made on three other commercial parcels west of Shiloh and south of Montana Sapphire Drive, although no deals have closed yet.

-- And the first tenant — a party store for children called Events — is moving into Sapphire Mall, a three-store condominium building fronting King Avenue West.

The U.S. economy was just heading into a historic recession five years ago when Warmer and Poppler picked up the Montana Sapphire listing.

"We rode it down and now with the resurgence of interest from retailers and multifamily developers, Sapphire's time has finally come," Poppler said.

Billings developer Cal Kunkel is investing between $10 million and $15 million to build 14 two-story apartment buildings with garages, Warmer said.

The first apartments in the first Sunset Beach building should be available for rent in July.

Kunkel hired Pat Weber, president of a local family-owned company, Sunset Construction, to build the 14-building apartment complex.

The oil boom is only one element in the keen demand for rental housing in Billings, Poppler said. More important factors are the steady population growth and a serious drop in home construction. At the peak in 2006, developers built 600 single-family homes in Billings. They built just 200 homes last year, according to Poppler.

"Our unemployment rate is 4.8 percent in Yellowstone County," he said. "Billings has jobs and quality of life. People are moving here."

And Cellular Wireless owner Adam Kimmett will start construction on another Verizon store in early summer.

The 65-acre subdivision was still farmland back in 1981 when Arnlund bought it.

The development now has a Beartooth Bank, Manny's Sports & Entertainment, Casino Mardi Gras and the VW dealership, which is 90 percent complete.

Arnlund, who has been developing real estate in Montana and Arizona for 20 years, said he finished his mini-mall in 2008, just before the financial crash. The mini-mall called Kari's Condos after his wife, Kari Arnlund, has sat vacant since then.

"It was not a lot of fun, but what the heck are you going to do?" he said.

Now Events, catering to children's parties, will be the first tenant.

Arnlund sold some land through the dry times to keep some cash flow coming in to pay First Interstate Bank.

Forty of the original 65 acres remain undeveloped with eight acres under option, Arnlund said.

"We're excited, there is so much activity," he said. "We expect to have several more closes this year."

Two large lots — one nearly 11 acres and one nearly 9 acres — can be subdivided, if necessary, he said.

By August, Steve Zabawa and John Soares Jr., who own Rimrock Auto Group, said they could start construction on two more dealerships south of their VW property.

They want to move their domestic dealerships — Cadillac/GMC and Chrysler/Jeep — from Phyllis Lane off South 24th Street West out to Shiloh and King.

First, though, they have to sell their property along Phyllis Lane. Zabawa said they are talking with a potential buyer.

Rimrock's owners also want to finish the VW building and win a dispute that would allow them to reopen their former Chrysler dealership.

When this Big Three U.S. automaker filed for bankruptcy protection in 2009, contracts with hundreds of Chrysler dealerships across the U.S. were terminated, including Rimrock's. Chrysler handed its brand to another Billings car dealer, Lithia.

The U.S. Senate then passed a bill allowing jilted car dealers to protest. Rimrock did and won in arbitration.

Zabawa said Chrysler has approved their re-opening of a Billings store, but Lithia is disputing that move. A hearing is set for April 2.

When the VW store opens and if the Chrysler fight is resolved in Rimrock's favor, Zabawa said construction on the $6 million project will start this August.

"We'd build both dealerships at the same time. That's about 25,000 square feet," he said.

The partners also are negotiating with another unidentified car maker to open a third dealership at Shiloh, Zabawa said.

An auto accessory business and a detailing shop owned by Rimrock also would move out to Shiloh.

One business, Subaru/KIA, would stay on South 24th Street West.

Last June, Rimrock opened a new Mercedes-Benz dealership at 3045 King Ave. W.

Zabawa and Soares worked for Arnlund for about five years until he sold them their first Billings dealership in 1998.

Development also is pending on the north side of King Avenue West.

A decade ago, the St. Vincent Healthcare Foundation purchased 115 acres north of Montana Sapphire for a future campus.

Until now in Billings, 24th Street West and King Avenue West was the epicenter of retail.

"I think that is moving out now to Shiloh and King," Warmer said.

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