Spokane Commercial Office Space for Rent

Q1 2026

Spokane Commercial Real Estate Market Report

Focus: Q1 2026 Market Trends

Executive Summary

The Spokane commercial real estate (CRE) market is navigating a dynamic Q1 2026, driven by a split-market recovery and shifting demographic preferences. The Office sector highlights this divergence, with suburban markets maintaining tight vacancies while the downtown core grapples with elevated availability. Industrial fundamentals remain steady, particularly in the West Plains area, supported by logistics growth and proximity to the airport. Retail remains fundamentally strong in high-traffic corridors like North Division Street, bolstered by low vacancy in high-growth submarkets. Meanwhile, the Multifamily market continues to attract strong investor interest despite affordability challenges, remaining the most active investment market in Eastern Washington.

TenantBase Proprietary Data highlights the distribution of active tenant demand over the last 90 days:

  • Retail/Storefront heavily dominated market activity with 58.11% of all searches (43 out of 74 total deals).
  • Warehouse was the second most active sector at 33.78% (25 deals).
  • Office accounted for 9.46% of total search volume (7 deals).

Office Market

Market Overview The Spokane office market is characterized by a "flight to functionality," where tenants are prioritizing accessibility, parking, and newer finishes over traditional downtown addresses.

  • Vacancy & Absorption: The overall office vacancy rate stands at an impressive 7.8%, well below the national average. The market recorded over 50,000 square feet of positive net absorption recently, driven by strong leasing and renewal activity.
  • Suburban Outperformance: A stark contrast exists between the central business district—where vacancy has climbed past 25%—and suburban markets. South Hill boasts a 3.6% vacancy rate, and Spokane Valley stands at 8.0%, driven by medical, education, and professional services demand.
  • Construction Halt: With no notable new construction in the pipeline and a conservative historical delivery pace, the market has avoided oversupply, supporting rent stability and consistent occupancy.

TenantBase Activity

  • Demand Share: Office accounted for 9.46% of total search volume.
  • Lease Term Preference: Tenant demand shows a preference for short-term flexibility, with Less than one year representing 66.67% of specified office deals (4 out of 6).
  • Size Requirements: The average lower-bound requirement for 3-5 Year leases is 1,000 SF (with upper bounds up to 2,500 SF), indicating that active office tenants are primarily seeking smaller, highly efficient footprints.

Industrial & Warehouse Market

Market Overview Spokane's industrial market continues to benefit from its strategic location in the Inland Northwest, absorbing demand from regional distribution networks.

  • Vacancy & Absorption: The industrial sector remains healthy, with submarkets like the West Plains holding steady at a tight 5.6% vacancy rate.
  • Submarket Dynamics: The market is heavily aided by logistics growth and excellent access to the Spokane International Airport, keeping tenant interest robust for functional warehouse spaces.
  • Demand for New Product: Investors from out of the area continue to target the Spokane market to reinvest proceeds, keeping competition for well-located industrial and flex properties strong.

TenantBase Activity

  • Demand Share: Warehouse space captured 33.78% of total search volume.
  • Lease Term Preference: Industrial tenants display a balanced preference across near-to-mid-term horizons, with 1-2 Years (33.33%) and 3-5 Years (25.00%) being the most commonly sought lease terms.
  • Size Requirements: Requirement footprints scale for mid-term commitments. The average lower-bound requirement for 3-5 Year terms is 2,500 SF, reaching up to an average upper bound of 10,000 SF.

Retail Market

Market Overview Retail across Spokane feels steady and active, supported by high-traffic commuter corridors and a growing regional population.

  • Vacancy & Construction: The retail market maintains low vacancy rates in high-growth submarkets, limiting options for expanding tenants.
  • Leasing Drivers: Strategic locations along major arterials like US-395/Division Street—which sees traffic counts exceeding 44,000 vehicles per day—continue to command premium interest and 100% occupancy for freestanding buildings.
  • Consumer Trends: Despite affordability challenges in the housing sector, steady regional employment and job stability continue to support consumer spending and retail cash flow.

TenantBase Activity

  • Demand Share: Retail/Storefront activity dominated the market with 58.11% of all search volume.
  • Lease Term Preference: Retailers prioritize operational stability, with 1-2 Years (37.50%) and 3-5 Years (31.25%) capturing the bulk of specified demand.
  • Top Locations: Locational interest was heavily concentrated across the region, with Coeur d'Alene, Post Falls, and Spokane proper capturing 6 deals each, followed by Pullman (2 deals) and Spokane Valley (2 deals).

Multifamily Market

Market Overview The Spokane multifamily market is a highly active investment target in early 2026, serving as the most dominant market in Eastern Washington.

  • Rent Growth: Apartment rents have risen substantially over the past several years, though recent quarters have seen stabilization with average rents resting near $1,348.
  • Vacancy & Supply: The region's multifamily vacancy rate sits around 7.8%. A significant housing deficit and declining homeownership affordability (with median home prices jumping dramatically) continue to funnel demand into the rental market.
  • Market Drivers: Spokane accounted for 56% of the region's multifamily sales volume recently. Buyers are increasingly prioritizing proven in-place operations, pushing average cap rates above 6.0% as the market adapts to current insurance and financing costs.

2026 Outlook

Moving further into 2026, the Spokane CRE market is well-positioned for stability, leaning on its balanced supply pipeline and strong regional demand.

  • Office Rebalancing: With zero major deliveries on the horizon, the conservative construction pace will help Spokane avoid the severe oversupply issues plaguing coastal markets, supporting rent stability in the suburbs.
  • Industrial & Retail Stability: The lack of speculative overbuilding will keep both the retail and industrial sectors highly competitive, particularly along established transportation and commuter corridors.
  • Multifamily Tightening: As single-family housing affordability remains a challenge, robust renter demand will support sustained occupancy in the multifamily sector, drawing continued out-of-state investment capital into the Inland Northwest.

Sources

  1. ACTIV8 Real Estate: Office Space Spokane Q1 2025 Market Update
  2. NAI Black: Greater Spokane Market Report
  3. Spokane Housing Coalition: The Truth About Housing in Spokane County
  4. Kidder Mathews: Eastern Washington Apartment Market Dynamics
  5. Marcus & Millichap: Spokane Retail Offering Memorandum
  6. The Spokesman-Review: Downtown Spokane Vacancy Rates
  7. TenantBase Proprietary Market Data (Dashboard Export: SEO Market Reports, March 22, 2026)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.