Maintaining downtown as the center of the community and supporting local business retention are among the goals of a draft update to the economic section of Whitefish’s growth policy.

Small businesses will have to navigate a real estate market that is no longer reminiscent of a sleepy railroad town to attain those goals.  

“We went from a little town where we just hoped potholes would be filled in streets, to an amenity driven destination,” said Scott Strellnauer, who has worked as a real estate broker in Whitefish since 1990.  

“We could not have fathomed the construction,” he said. “But the big shift is that no longer can a small business owner afford to buy a downtown building and make it their own.” 

Recent shifts in real estate were further driven by the uncertainty of the pandemic and the resulting desire for people – and investors – to make life-changes, he said.  

Strellnauer explained that downtown properties are expensive because they are like lakefront properties, in that the cost doesn’t reflect the value of the building, but rather the access.  

Investors must balance high costs with the anticipated rate of return.  

Buyers have to say, “I believe in the building, and I believe in Whitefish downtown. But to do that, they need to be able to justify the rent in the revenue that can be made within the space,” Strellnauer said.  

In downtown Whitefish, the cost often exceeds the rate of return, leading to vacancies.  

Building vertical and placing shops on the street level and condos or offices on the top has become more common in Whitefish because it helps with affordability. 

Dividing buildings into smaller, more numerous spaces has also seen recent success on Central Avenue, Strellnauer said.  

“We’re all nostalgic,” he said. “We all have this inner part of us that doesn’t want to see the changes. But change is inevitable, and it’s the only way to make sense financially.”  

MANY MAIN-STAY businesses that cater to locals are generational and own their buildings.  

Owning is the only feasible way for Imagination Station to stay open, said owner Denise Magstadt. 

The toy store on Central Avenue purchased their property in 1999 but still must navigate rising property taxes and repair costs for an older building, she said.  

Sappari, a clothing store next door, has rented for about 25 years and has seen through a couple of changes in ownership. Co-owner Connie Kelsay said that having local ownership has been beneficial for staying in business.  

Kelsay pointed to a general shift toward online shopping as a large risk for their store.  

Several business owners on Central Avenue raised concerns with parking and solicitation in the form of hand-outs from other businesses on the street.  

A LOOK at the current market shows that a trio of white and green painted stores including Sage & Cedar and Sprouts Boutique is listed for sale at $3.6 million. Both businesses have a couple of years or so remaining on their leases, employees said. Once sold, those businesses will be looking to the new owners to uphold their leases.  

Elsewhere in town, Wasabi Sushi is listed for sale at $2.3 million.  

A unit at 317 Central Avenue #A, Forloh, is listed for $2.3 million. It states in the listing that it is “tenant occupied, do not disturb business and staff.” 

A few of the downtown vacancies for sale include 241 Central Ave., formally Stephen Isley Jewelry, listed at $1.57 million, and the upper level of the historic Masonic Temple Building at 300 East Second St., listed at $1.4 million.  

Tenants at the almost vacant 550 East First St. building have moved since the property was sold last year. The new owner of that property is registered in Montana as “550 E 1st St. LLC” with a mailing address in Oceanside, California. The Carlsbad, California branch of Jalisco Cantina has the same mailing address.  

A former tenant, Jersey Boys Pizzeria, moved to a larger space south of town last fall, and Whitefish Lake Institute moved to a location at Spokane Avenue and East Fourth Street last month. 

The last tenant left, Runner Up Sports, will move to a Columbia Falls location next month.  

Chad Colby, owner of Runner Up, said that the new owners were very generous and presented multiple reasonable options for them to stay in Whitefish for several more years. That was initially their plan, but they decided to jump on the Columbia Falls property, nonetheless.