Spokane Industrial Real Estate Market Report – Q1 2025 Trends, Vacancy, and Construction
After more than a decade of strong performance, the Spokane industrial real estate market is navigating a cooling cycle. Q1 2025 marks a period of rising vacancy, flat rent growth, and slowing construction activity—shaped by the aftereffects of overbuilding during peak demand years.
Data sourced from CoStar, Crexi, broker-reported activity, and publicly available information as of April 2025.
Don’t want to read? Watch the Q1 2025 Spokane Multifamily report here:
Market Snapshot – Spokane Industrial Q1 2025
- Vacancy Rate: 6.4% (up from 2.6% in 2023)
- 12-Month Net Absorption: 71,000 SF
- Deliveries (12 Months): 799,000 SF
- Market Rent Growth: 0.3% year-over-year
- Construction Pipeline: 216,897 SF (0.4% of inventory)
Vacancy Rising as Absorption Slows
Spokane experienced its first year of negative absorption in 13 years during 2024, and while 2025 has shown some improvement, leasing activity remains weak. Vacancies climbed from under 3% to over 6% in just 24 months.
- Logistics properties: 9.8% vacancy
- Flex space: 6.4% vacancy
- Specialized industrial: 2.0% vacancy
This shift is primarily due to a surge in logistics-related construction over the past few years, combined with softer demand from manufacturers and distributors in late 2023.
Rent Growth Stalls
Market-wide rents average $8.85/SF, reflecting just 0.3% growth year-over-year—well below Spokane’s five-year average of 3.2%.
By property type:
- Logistics: $8.48/SF (rent growth flat)
- Specialized Industrial: $8.92/SF
- Flex: $10.65/SF
Spokane has historically underperformed the national average on rent growth, with 22.7% cumulative growth over five years, compared to 37.7% nationally. Short-term projections suggest rents may turn slightly negative before rebounding by late 2025.
Construction Pipeline Shrinks
Following several years of aggressive construction, activity has slowed significantly. Only two projects totaling 217,000 SF are currently underway in Spokane, representing just 0.4% of total inventory.
🔨 Notable Projects Under Construction:
- King Beverage HQ – 3520 S Geiger Blvd (West Plains): 205,000 SF | Completion: Oct 2026
- 3830 Olympic Ave (SE North Metro): 11,897 SF | Completion: May 2025
With over 1 million SF delivered annually since 2020, this cooldown signals a transition to more tenant-driven, low-risk development.
Sales Activity and Industrial Investment Trends
Spokane’s industrial investment market has cooled but remains active, particularly among local and regional players.
- 12-month sales volume: $75.9 million
- Average price: $70/SF
- Average cap rate: 7.3%
Notable transaction:
- 6715 E Mission Ave (King Beverage) – 90,826 SF sold via sale-leaseback to Hotstart for $11.5 million ($127/SF), part of a 1031 exchange.
Large institutional players are less active due to higher interest rates, but private investors continue to target smaller, single-tenant buildings for long-term stability.
Submarket Performance Highlights
| Submarket | Vacancy | Rent/SF | Net Absorption | Under Construction |
|---|---|---|---|---|
| West Plains | 9.8% | $8.57 | 327,880 SF | 205,000 SF |
| Valley | 4.0% | $8.91 | -128,472 SF | 0 SF |
| SE North Metro | 3.3% | $9.00 | -1,317 SF | 11,897 SF |
| Spokane CBD | 8.3% | $8.27 | -23,961 SF | 0 SF |
| South Hill | 6.9% | $9.92 | +5,500 SF | 0 SF |
The West Plains continues to dominate new construction and larger lease-ups, while the Valley submarket saw the largest absorption losses. Spokane CBD remains under pressure, with higher vacancy and flat rents.
Economic Context for Spokane’s Industrial Sector
Spokane’s strategic location between Seattle and Boise, combined with access to Spokane International Airport, supports its role as a logistics hub. However, several factors are tempering industrial demand:
- Slowing in-migration and affordability issues
- Job growth led by education, healthcare, and government—not logistics
- Retail sales and distribution demand cooled post-pandemic
- Labor shortages persist in warehousing and manufacturing
Despite challenges, Spokane remains cost-competitive compared to coastal markets, and its low cost of entry continues to attract new businesses and investors.
Outlook: Has Spokane Industrial Hit Bottom?
The current indicators suggest Spokane’s industrial vacancy may have peaked in early 2025. With limited new construction and early signs of leasing recovery, stability may return by late 2025 or early 2026.
Key watchpoints:
- Tenant demand from food/beverage and distribution users
- Flex and small-bay demand in Valley and SE North Metro
- Repricing of existing assets as cap rates stabilize
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