Spokane Journal of Business

Gains expected in much of Inland Northwest

Industrial development, single-family home sales are top performers in ’20

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-Natasha Nellis
Street-level vacancies have grown in downtown Spokane since the onset of the pandemic, but some of that space is expected to be absorbed.

Real estate in Spokane stayed surprisingly strong in most sectors through the pandemic, say industry observers here, with home sales and commercial real estate investment, particularly in industrial space, seeing strong growth.

Rob Higgins, executive officer of the Spokane Association of Realtors, says 2020 homes sales were up 1.3% through November compared with the first 11 months of 2019.

Comparatively, sales were down 6.1% through November 2019 compared with the first 11 months of 2018.

“2020 turned out better than expected,” says Higgins. “This is reportedly the worst part of the pandemic, these winter months, but I think 11 months tells us we ended up having a better year than expected.”

Through November, 7,387 single family homes and condominiums were sold, up from 7,295 in the year-earlier period.

The median sales price was $309,500, up 15.3% compared with a year ago. That marks the third straight year median sales prices have seen double-digit increases, says Higgins. In 2018, median sales prices were up 11.9%, in 2019 they were up 10.6%.

“I don’t know how long we can sustain that,” he says. Sales prices are being driven up by several factors, including a rapidly shrinking supply of homes for sale—inventory is down 55.7% from a year ago—and historically low interest rates, he notes.

Dallas Becker, owner of Windermere Spokane-North, concurs, adding residential sales will likely be challenged in 2021, with fewer homes coming on the market.

“We’ve absorbed what little inventory slack existed,” he says. “There’s no more slack to give.”

He adds that, like Higgins, he expects to continue to see strong price appreciation, though he notes it’s likely the growth rate will drop back into the single digits, at between 8% and 9%.

Jeff Johnson, president of Black Commercial Inc., says industrial real estate is expected to be the “shining star of 2021,” with a few million square feet of industrial space expected to come online next year. The bulk of the demand for that space is coming from e-commerce companies, he says.

Multifamily and medical office space also are expected to perform well, while demand for regular office is expected to remain flat or decrease modestly in the next year as companies look to downsize.

“The majority of these companies have a lease in place, so it’s not going to be all at once,” Johnson contends. “Downsizing takes place over time.”

Restaurants, small retail, and fitness centers saw the biggest struggle in 2020, he notes. Restaurants are expected to rebound, with several new restaurateurs eyeing the Spokane market for new locations, he says.

Small retail, as well as big-box stores, will continue their transition away from traditional brick-and-mortar locations, Johnson predicts.

“There’s a little bit of a hurdle to get over in the next 60 to 90 days. 2021 is about getting past COVID and preparing for 2022,” he says.

Gains will be dependent on state restrictions, he notes, as well as vaccine rollouts.

Natasha Nellis
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Reporter Natasha Nellis joined the Journal in May 2018 and covers real estate and construction. Natasha is an avid reader and loves taking photos, traveling, and learning new languages.

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