Real estate market optimism persists in Spokane
~December 20th, 2018
The commercial real estate sector will see a strong year in 2019 due in part to companies from other areas leasing space in Spokane, some industry professionals here say.
Jon Jeffreys, broker at NAI Black, says he saw some office space absorbed this year and expects that to continue steadily through 2019.
Major real estate markets, such as Seattle, are “getting extremely expensive for office space,” says Jeffreys. Because of that and Spokane’s cost of living, businesses from those markets have been leasing up space here for back-office work, he says.
The office market has been slower to grow since the recession than other types of commercial real estate, says Jeffreys. Some of that has to do with companies more efficiently using their space, with employees using less individual space and more collaborative areas, he says. Working remotely also has affected the office market rebound here.
Jeff Johnson, president of NAI Black affiliate Black Commercial Inc., says Spokane has a vibrant and growing startup community, which benefits the office market as well.
“They have been plugging up some of the long-standing, vacant, inexpensive space that we’ve had,” he says.
Carlos Herrera, general manager of Spokane-based SDS Realty Inc., says the industrial market also has seen interest from companies outside of Spokane.
Herrera asserts, “We’re going to continue to have outside, larger companies coming into the Spokane area and utilizing that industrial space.”
He contends there isn’t enough industrial space to meet demand, so SDS Realty is constructing a few industrial complexes to accommodate that.
A recent survey compiled by Spokane Valley-based Valbridge Property Advisors|Inland Pacific Northwest reported a 2.4 percent industrial vacancy rate as of October, up slightly from 2.2 percent a year earlier.
The report also showed an overall competitive office space vacancy rate of 16.4 percent in Spokane’s central business district in October, marginally down from a 16.6 percent vacancy rate a year earlier.
Competitive retail space in the CBD had a vacancy rate of 8.4 percent, down from 9.8 percent in October 2017.
On the residential side, Rob Higgins, executive vice president of the Spokane Association of Realtors, says he expects single-family home sales will reach 8,200 units this year, compared with 8,135 homes sold through the association’s Multiple Listing Service in 2017.
“Hopefully, we’ll match (2018 home sales) next year, but we probably won’t see any big increase,” says Higgins.
The median sales price for homes sold in Spokane County through the MLS in the first 11 months of the year was $235,000, an increase of 11.9 percent compared the median sales price of $210,000 in the year-earlier period.
A number of factors affect the residential market right now, such as increases in home prices and a significant drop in the number of homes for sale, Higgins says.
“Because of the lack of inventory, we still have the demand,” Higgins says.
He adds he “wouldn’t be surprised” if average home prices increased by between 6 percent and 8 percent in the Spokane market in 2019.