The apartment vacancy rate is above 8% in the Spokane area, but this percentage doesn't capture the actual experience of many multifamily property owners. In reality, the market is split here; some buildings are completely full, while others are struggling with higher vacancy.

In previous coverage, I explained that market averages don't capture everything happening on the ground in the Inland Northwest. Nowhere is that truer than the apartment market in Spokane County.

Spokane apartment vacancy is above the long-run average of about 6%. Asking rents currently sit around $1,395 a month, up less than 1% over the past year.

Construction, meanwhile, has collapsed with about 1,200 units currently underway — about 2.7% of the market and the lowest level since 2021 — down from more than 2,900 units that were underway three years ago. Building new projects became very expensive after the pandemic and interest rates skyrocketed, making underwriting multifamily projects more costly. This caused many developers and investors to pull back from building new properties because the financials did not pencil.

The remaining construction pipeline is skewed toward mid-tier, three-star properties. Those 1,200 units are being added to the exact market segment that is already suffering from the highest vacancy rates in Spokane. Instead of the supply being spread out, it's piling onto the market’s weakest point.

So, if the development pipeline has shrunk by more than half, why is vacancy still going up? 

Two things are happening at once, and only one of them is about supply.

First, unit deliveries lag decisions by a couple years. The units opening now, including buildings that started leasing this summer, were planned and financed about two years ago. Developers slowed breaking ground in 2023, but the impact on vacancy rates won’t be felt until projects already underway are completed and absorbed.

Second, demand for multifamily housing has fallen off sharply. Spokane absorbed about 1,740 apartments in the 12 months ending mid-2025. As of July 2026, closer to 735 units have been absorbed in the last 12 months.

Absorption has been cut roughly in half in a year, due to slower in-migration and cooling job growth. A year ago, the market was absorbing more than it delivered. Now, it absorbs about 735 units against 815 delivered. Construction collapsing doesn't help when demand falls faster than supply does.

For instance, a 240-unit property in Spokane currently is about 50% leased a year after opening; roughly 120 units remain available. If Spokane only absorbed about 735 units over the past year, that 240-unit building accounts for an estimated 1-in-6 apartments leased across the entire market.

In many cases, those renters didn't move to Spokane; most of them moved across it. For every lease signed in a new building, that usually opens a vacancy in an existing one. As there are 120 more units to fill, people are expected to vacate other, older properties in favor of newer properties featuring additional amenities. This is happening because of the low absorption rate we have today. 

Let’s say average one-bedroom rents are $1,450 per month. If this new building opened with rents at $1,300, it has undercut the market. As a result, neighboring multifamily property owners need to lower their rents to remain competitive, all while some of their tenants may decide to leave to lock in a lower rental rate at the newer property.

That's how a previously full building can end up with 20% to 30% vacancy. 

Concessions are where the real damage to an owner's bottom line hides, and none of it shows up in the asking rent. To find the real value, you have to look at what is actually being collected, not what is being advertised.

For example, competitive properties are marketing one to two months free as a standard concession currently. A concession of two months free rent on a 12-month lease is about a 17% discount, so a monthly rate of $1,395 yields closer to $1,160 in actual collections. 

If you're underwriting a Spokane apartment purchase based off asking rents, or based on published effective rents, it's likely you're overstating income. Due diligence is necessary to uncover the concessions competitors are offering to maintain occupancy. 

This isn't happening everywhere, and it isn't happening to everyone. The pressure is concentrated where new supply landed and where it's priced aggressively to fill. 

Looking past the 8% market-wide average vacancy rate, workforce housing is quietly thriving. Concessions and high turnover are largely issues for properties located within 2 miles of a new delivery. Older, more affordable properties that are located away from those areas are experiencing higher occupancy and better margins than the general market data suggests, as building owners don't have to defend against the pricing of new competitors. 

Demand hasn't disappeared in Spokane. Despite a dip in absorption figures, the market managed to grow in the last 12 months. In a total market of 44,500 apartments, renters absorbed 735 units in the last year — a sharp drop from previous highs, but not a collapse. The primary change is that the "renter's market" has finally arrived; with more choices available than at any point in the last decade, residents are no longer settling and are instead leveraging their options.

While empty apartment units are the most obvious sign of a struggling market, the real financial damage is happening in the less obvious operational costs required to manage and fill those units. 

Across the rent rolls and portfolios I review, turnover and marketing costs have climbed sharply, and lease buyouts are the highest I've tracked. Tenants are paying money to get out of their leases early, which only makes sense when the deal down the street more than covers the cost of leaving.

Owners in competitive areas of Spokane currently are facing four simultaneous financial pressures that a simple vacancy rate doesn't capture. Multifamily property owners are contending with units that are vacant longer, increased marketing costs, higher turnover expenses, and more lease buyouts.

Spokane’s long-term outlook is brighter than present data suggests. Current high vacancy isn't an indication of an overbuilt market, but a result of a temporary delivery spike. With fewer apartment properties expected going forward, this pipeline will eventually create a market favoring landlords again. That's a real tailwind, whenever it arrives. 

But that's the destination, not the current picture, and getting there depends on renters returning. The apartments delivered over the past two years are still filling up, but they're filling at the expense of existing buildings, and the owners of those buildings are absorbing the cost of it right now.

If you're weighing a sale or a refinance in the next year and a half, the market average won't help you, but asking three questions likely will: What's leasing within 2 miles of your building? How much of the property is empty? What concessions are you willing to give away to fill up?

The owners who know those numbers, and who have leasing and management working ahead of the problem instead of reacting to it, will be holding the better assets when this turns.

Eric Peterson, CCIM, is president and designated broker of ACTIV8 Real Estate, a commercial brokerage and property management company. He can be reached at [email protected].