Office Space Spokane: Q1 2025 Market Update on Vacancy, Leasing, and Investment Trends

Steady Demand, Tight Supply, and Strategic Shifts Define the Market

Spokane’s office market continues to demonstrate resilience as national markets work through post-pandemic corrections. With low overall vacancy, strong lease activity, and no notable new construction in the pipeline, the local market remains balanced and well-positioned heading into the second quarter.

Data sourced from CoStar, Crexi, broker-reported activity, and publicly available information as of April 2025.

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Office Space Demand in Spokane: Q1 2025 Leasing Trends and Tenant Activity

Spokane recorded 50,700 square feet of positive net absorption over the past 12 months—small by volume but meaningful in a low-growth environment. Leasing activity and renewals in 2024 exceeded 1 million square feet, a 30% increase over the 2015–2019 average, and that momentum has carried into early 2025.

Top leases signed in the past year include:

• Frencken America – 40,000 SF at Meadowwood Technology Park
• Clearwater Paper Corporation – 30,000 SF renewal at the Bank of America Building
• Premera Blue Cross – 30,150 SF at 3900 E Sprague Ave
• Spokane Colleges – 26,637 SF at Riverpoint One

Suburban markets such as Spokane Valley and South Hill led the way, particularly for medical, education, and professional services users. While leasing is slower than last year’s peak, demand remains healthy, with limited sublease availability and rising tenant interest in functional, cost-effective space.

Spokane Office Space Vacancy Rates: CBD vs. Suburban Market Comparison

As of Q1 2025, Spokane’s overall office vacancy rate stands at 7.8%, well below the national average of 13.9%. The market’s availability rate is 8.2%, and with no new construction in progress, that balance is expected to hold through the remainder of the year.

However, vacancy is not evenly distributed across the region.

Spokane’s Central Business District (CBD) is under pressure:

• Office space in the CBD reports over 25% vacancy
• Demand has shifted toward more flexible and suburban options
• Older buildings with limited parking and outdated infrastructure are facing higher turnover and slower lease-up cycles
• Some landlords are considering renovations, creative repositioning, or adaptive reuse to remain competitive

Suburban submarkets are holding firm:

• South Hill reports 3.6% vacancy with continued demand from healthcare and professional tenants
• Spokane Valley stands at 8.0%, driven by strong lease activity and newer inventory
• West Plains holds steady at 5.6%, aided by logistics growth and access to the airport

This contrast highlights a flight to functionality—tenants are prioritizing accessibility, parking, and newer finishes over traditional downtown addresses. The result is a split-market recovery, where landlords in the suburbs are seeing momentum, while downtown owners are rethinking long-term strategies.

Spokane Office Space Rental Rates Q1 2025: Growth, Trends, and Class Breakdown

The average gross asking rent in Spokane is $21.37/SF, showing 0.5% year-over-year growth. This may appear modest, but the market has delivered 33.2% cumulative rent growth over the past 10 years, far outpacing the 22.5% national average.

Rent by Class (Gross):

• Class A: $25.93/SF
• Class B: $22.95/SF
• Class C: $19.49/SF

Medical office and suburban professional buildings continue to outperform, especially in the Spokane Valley and Liberty Lake, where demand for accessible and affordable space is high.

New Office Space Development in Spokane: Construction Trends Q1 2025

There are currently no new office developments under construction in the Spokane market. Over the past 10 years:

• 850,000 SF of new office was delivered
• 250,000 SF was removed through demolitions and conversions
• Net growth: 600,000 SF total (an average of 60,000 SF/year)

This conservative pace has helped Spokane avoid oversupply, especially compared to Seattle or Portland. With no major deliveries on the horizon, the market is expected to remain tight, supporting rent stability and occupancy.

Spokane Commercial Office Sales Q1 2025: Cap Rates and Transaction Highlights

Spokane saw an uptick in investment activity in early 2025, putting the market on pace to exceed 2024’s sales volume of $69.5 million and moving closer to the five-year pre-pandemic average of $100M+ per year.

Notable Q1 2025 Transactions:

• Riverpoint One – 70,856 SF, sold for $12.2M to Spokane Public Schools (owner-user)
• 1306 N Post St – 5,561 SF, sold at 93% vacancy for just under $1M
• 1402 W Broadway – Small office/medical conversion, sold for $792,500

Across all office sales in the past 12 months:

Sales are primarily being driven by owner-users and sale-leasebacks, signaling confidence among local businesses and regional investors.

Economic Trends Driving Spokane Office Space Demand in 2025

Spokane’s economic foundation remains solid, with a 3.1% GDP growth rate in 2023, supported by healthcare, education, logistics, and government sectors. Major employers include:

• Fairchild Air Force Base
• Amazon
• Spokane Public Schools
• Providence Health

At the same time, affordability challenges are beginning to affect growth:

• Apartment rents rose 20% from 2020 to 2025
• Median household incomes remain below national averages
• New zoning for higher-density housing has had limited short-term impact

These factors are encouraging some businesses to stay put, while others are being more strategic about space planning and long-term leasing.

Spokane Office Submarket Performance: Vacancy, Absorption, and Rent by Area

Submarket	Vacancy Rate	12-Mo Absorption	Avg. Asking Rent
Spokane CBD	12.0% reported (actual over 25%)	-74,487 SF	$21.74/SF
Spokane Valley	8.0%	+76,597 SF	$20.56/SF
South Hill	3.6%	+109,895 SF	$24.00/SF
West Plains	5.6%	+8,565 SF	$21.73/SF

What This Means for Owners and Tenants

For Owners:

• This is a landlord-friendly environment in the suburbs, while CBD owners must pivot creatively
• With no new inventory coming online, now is the time to reinvest in leasing, capital improvements, and long-term planning

For Tenants:

• Rent growth is manageable, but inventory is tightening
• Early renewals and expansion planning will yield better results, especially in high-demand submarkets

How We Can Help

At ACTIV8 Real Estate, we specialize in helping Spokane office owners and tenants make confident, strategic decisions. I offer customized guidance, market insight, and proprietary tools, including:

• AssetVitals™ – A strategic reporting tool for property owners that monitors building health and identifies key opportunities to increase NOI and long-term value
• LeaseVitals™ – A tenant-focused lease intelligence tool that helps businesses stay ahead of renewals, escalations, and lease risks
• PortfolioVitals™ – A portfolio-level analysis tool for investors managing multiple assets, offering consolidated insights to support capital planning and timing strategy
• AssetEstimate™ – A data-backed market positioning report that provides owners with real-time valuation insight and go-to-market strategy recommendations

📩 Let’s connect to review your office leasing, investment, or property strategy.

📞 Email: [email protected]

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