Inland Empire's CBD Office Market Maintains Relative Strength

SPOKANE, WA-Strength lies in numbers. But it’s not always the one that measures the largest that is the strongest. Spokane, the centerpiece of Washington’s Inland Empire, has a much smaller office market than its big-city counterpart of Seattle, but its occupancy is higher–at least for now.

According to statistics recently gathered by the real estate analysis and appraisal firm of Auble, Jolicoeur & Gentry, class A space in downtown Spokane measures 906,891 sf. As of October its vacancy was running 8.37%. In contrast, class A space in downtown Seattle was vacant to the tune of 10.79% as of the end of the third quarter. Spokane’s October overall average office vacancy– including A, B and C properties — worked out to 11.46%. Seattle’s was 13%.

Spokane rents are, of course, lower than the averages in downtown Seattle—where third quarter reports calculated Class A spaces averaging rents at $34.25/sf. Here Class A space is fetching $18.38/sf, with the most recent deal rolling out at $19.72/sf.

Karen Meek, an appraiser with Spokane-based Auble, Jolicoeur & Gentry, tells GlobeSt new leases in Spokane’s CBD are “being written with built-in rent escalation clauses of 2 to 3 percent, and most leases for smaller tenants are running three to five years.” Tenant improvements she says are running $5-$15/sf. And, she says, “Most buildings in Spokane are now being rented on a usable-area basis. But, new buildings are going to rentable, and some of the older ones are converting.”

“The office market in Spokane has been very strong for several years,” says Meek. Historically, Spokane tends not to be a boom-or-bust type of market, rather having flatter peaks and valleys in its cycles. Another current difference between it and Seattle, besides size, is the fact that Spokane did not attract much by way of the dot-com tenants that dissolved when that industry turned on its heels.