The retail sector should see modest improvement in 2011, but that's from a depressed baseline pushed down by the poor economy, and observers here say it could be some time before the industry recovers fully.

"We are cautiously optimistic about 2011," says Stephen Pohl, general manager of River Park Square downtown. "2011 will be a transitional year, but our observations as this year draws to a close have been that the Spokane market has caught the attention of a number of (national) retailers."

River Park Square has been a bright spot. Its tenants are expected to manage sales growth this year of 3 percent to 4 percent, and lease renewals are running at 100 percent, Pohl says. He says the mall expects to announce several new tenants in 2011.

"That's good for us and speaks well for our future," he says.

The city of Spokane is budgeting for a 0.5 percent increase in retail sales next year, says city spokeswoman Marlene Feist. Through September of this year, retail sales taxes collected within the city were down about 1 percent from the year-earlier period, she says.

"Typically, we see sales tax grow a little every year, so you can see this is a tough period, as you would expect," Feist says.

Randy Barcus, chief economist for Avista Corp., says it's hard to say what retail sales here will look like going into 2011.

"There is way too much uncertainty with government policy and congressional action," Barcus says. "Once those things are settled, it will be much clearer what will happen."

Barcus says the housing market is the slowest he's seen since he started observing the local economy about 30 years ago, and that hurts retail sales.

"Unemployment is also high, so spending has been suppressed across the board," he says. "People are buying more necessities, and therefore forgoing the optional things."

National retail spending reports this holiday season so far have been encouraging, Barcus says, but adds it's unclear whether that will translate into stronger sales here.

"It's fair for me to say that we're not going to have a double-dip recession, and I expect retail sales won't be much different (in 2011) than in 2010, but there are a lot of wild cards out there," he says. "It's cumulative, and I think we'll be bouncing along the bottom of the business cycle, like we've done this year."

Meanwhile, retail development and leasing is expected to be better in 2011 than it was this year, says longtime developer and broker Marshall Clark, of Clark Pacific Real Estate Co. here.

"It's been a slow, gradual progression, and it's going to be gradual for awhile," Clark says. "A lot of clients are being cautious, but I think there will be more activity in the future as they become more confident about the economy."

—Chey Scott