Spokane Multifamily Market Update – Q1 2025
The Spokane Multifamily real estate market is entering a new phase—stabilization. After years of rapid construction and rising vacancies, Q1 2025 marks a turning point as supply and demand begin to rebalance. Here’s a detailed look at what’s happening across the Spokane multifamily market and what it means for investors, developers, and owners.
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:
Vacancy Rates Declining as Leasing Catches Up
The region’s vacancy rate dropped to 8.0% in Q1 2025, down from 8.7% one year ago. This shift signals that the market may have passed peak vacancy for this cycle. Absorption matched new inventory almost exactly, with 1,613 units delivered and 1,559 units absorbed over the past year.
By asset class:
- 4 & 5 Star Properties: 11.2% vacancy
- 3 Star Properties: 7.8% vacancy
- 1 & 2 Star Properties: 5.9% vacancy
Vacancy is highest in areas with heavy recent construction, such as North Spokane and the county outskirts. Conversely, Spokane Valley and Downtown Spokane show more stable performance due to slower new development activity.
Rents Holding Flat, But Stabilizing Ahead
As of Q1 2025, average asking rent in Spokane sits at $1,358/month, with rent growth essentially flat year-over-year at 0.2%.
- 4 & 5 Star Properties: $1,625/month – rents are declining when factoring in lease concessions
- 3 Star Properties: $1,368/month – stable
- 1 & 2 Star Properties: $1,008/month – modest positive growth
Lease concessions remain widespread in newer communities, with some offering up to two months free. However, with new supply slowing, the market is expected to return to pre-pandemic norms—around 4% annual rent growth—by the end of 2025, assuming continued economic and population growth.
Construction Pipeline Slows but Continues with Key Projects
Spokane’s multifamily construction pipeline is down significantly from previous years, but key developments remain active. As of Q1, there are 7 properties under construction totaling 855 units, which represents about 2.0% of total market inventory. This is a steep drop from the 3,300 units under construction in 2023.
Major Projects Under Construction:
- Signal Point Apartments (Liberty Lake) – 240 garden-style units by Fourth Avenue Capital, expected completion: October 2025
- The James (Rustle St, West Spokane) – 140-unit midrise by Fortify Holdings, expected July 2025
- Lofts at Garden District (South Hill) – 79-unit low-rise by Greenstone, expected May 2025
- Mirabeau Place (North Spokane Valley) – 322 units by Whitewater Creek Inc., expected February 2026
- North Foothills Dr Project – 36 units by Mikhail Grishko & Slava Mishin, completing October 2025
- Symons Block (Downtown Spokane) – 14-unit mixed-use redevelopment by Joel & Jon Diamond LLC
- McKinnon Rd Project – 24 units by Enjp LLC, expected May 2025
These projects reflect a mix of suburban and urban infill developments, midrise and garden-style formats, and both private and institutional developers.
Construction Outlook:
- Starts are at the lowest levels since 2012
- Most developers are facing financing challenges due to high interest rates and rising construction costs
- Adaptive reuse/conversion projects in Downtown Spokane are underway but face cost barriers
Overall, the Spokane real estate market is entering a cooling phase in terms of new development, which may help absorb existing inventory and support future rent growth.
Multifamily Sales Activity at Decade Lows
Transaction volume in the Spokane multifamily market totaled just $80 million over the past 12 months—less than half of the prior year’s sales and the lowest level in over a decade.
- Average Cap Rate: 6.2%, up from sub-5% levels during the peak of 2021–2022
- Investor Mix: Private investors still represent 90% of buyers, but institutional interest has increased.
Despite the pullback, interest in Spokane real estate investing remains, driven by continued renter demand, migration from more expensive metros, and long-term affordability advantages.
Submarket Performance Snapshot
| Submarket | Vacancy | Rent Growth |
|---|---|---|
| Spokane Valley | 6.4% | +2.3% |
| Downtown Spokane | 7.5% | -0.2% |
| North Spokane | 12.0% | -1.9% |
| South Spokane | 4.6% | 0.0% |
Spokane Valley shows strong rent growth and absorption, while North Spokane is grappling with the highest vacancy due to overbuilding. Downtown Spokane continues to be a focal point for both leasing and potential redevelopment activity.
Economic Trends Impacting Demand
Spokane’s economy remains relatively strong but is showing signs of strain:
- Job Growth: Driven by education, healthcare, logistics, and government
- Affordability Pressures: Rents up 20% since 2020; incomes not keeping pace
- Population Growth: Still positive but decelerating; in-migration has slowed
- Zoning Reform: New upzoning laws passed, but permitting remains sluggish
These factors are shaping short-term demand but suggest long-term opportunity for well-positioned assets.
Outlook for Spokane Multifamily in 2025
The Spokane multifamily market is entering a normalization phase, where slowed construction, flat rents, and stabilizing vacancies may create more predictable conditions for investors and operators.
Key Takeaways:
- Vacancy has likely peaked and should continue to decline
- Rent growth may return in late 2025 as supply pressure eases
- New development will remain slow due to economic headwinds
- The Spokane real estate market remains attractive, especially for buyers focused on long-term fundamentals
If you’re considering buying, selling, or repositioning a multifamily asset in the Spokane area, now is the time to review your strategy. Our team at ACTIV8 Real Estate specializes in helping investors and owners navigate these dynamic conditions with data-driven insights and hands-on experience.
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