Spokane Office Market Report Q1 2026

The Spokane office market opened 2026 with a 7.6% headline vacancy rate — less than half the 19% U.S. national average and a fraction of the 30%+ vacancy seen in major coastal markets like San Francisco and Seattle. But that 7.6% figure obscures more than it reveals: the Spokane office market is sharply bifurcated, and treating the headline number as a single market signal will mislead any owner, tenant, or investor making decisions in 2026.

Suburban Spokane office is genuinely tight. South Hill carries just 2.6% vacancy, the Valley sits at 7.4% with the deepest transaction liquidity in the region (anchored by the upcoming F5 Building delivery), and the West Plains is at 5.8% with the F5 Networks build-to-suit and Aerospace Tech Hub poised to drive H2 2026 absorption. The Spokane CBD is a different story — 11.3% vacancy, distressed Class B/C product trading at $22 per square foot (RenCorp’s recent purchase of 111 N Wall Street), and a slow grind of repositioning that will define the downtown narrative through this cycle. Understanding which submarket your asset, your prospect, or your acquisition target sits in is the entire game in Spokane office in 2026.

Key Statistics — Spokane Office | Q1 2026

• Market Vacancy: 7.6% (vs. 19% national average · 30%+ in coastal markets)
• Submarket Spread: South Hill 2.6% · Valley 7.4% · West Plains 5.8% · CBD 11.3%
• Market Asking Rent: $21.52/SF · 0.7% YOY growth · 33.6% cumulative 10-year growth (vs. 18% national)
• 12-Month Sales Volume: $65.1M · 45 transactions (vs. $102M five-year average)
• Cap Rates: 6.4–7.5% on stabilized investment-grade transactions · 10.2% CoStar model rate
• Total Inventory: 24.2M SF across CBD, Valley, North, South Hill, West Plains, University District
• New Construction: F5 Building (57,000 SF, 100% preleased, May 2026 delivery)
• CBD Distress Signal: RenCorp acquired 111 N Wall Street (102,132 SF) at $22/SF

Spokane Office Market Overview — Q1 2026

Spokane’s 24.2 million square feet of office inventory is essentially unchanged from a decade ago. Conversions of older buildings, outright demolitions, and a nearly complete absence of speculative new construction have kept a tight lid on supply that virtually no other market in the Western United States can match. That structural discipline — also evident in our Spokane Retail Market Report Q1 2026 — is the single biggest reason vacancy sits at 7.6% while comparable Western markets are struggling.

The one building under construction in the entire Spokane market is the F5 Building at 12511 E Pinecroft Way in the Valley submarket — a 57,000-square-foot build-to-suit for F5 Networks, 100% preleased, scheduled to deliver May 2026. In a 24.2-million-square-foot market, that is 0.2% of inventory. The pipeline is a tailwind, not a headwind.

Leasing activity over the trailing 12 months totaled close to 1 million square feet, led by medical, professional services, and education users. Notable deals include F5’s 57,000-square-foot anchor lease, a 41,727-square-foot renewal by Northwest Orthopaedic Specialists at Spokane Integrated Medical Plaza on South Hill, and a 40,000-square-foot lease at 3900 E Sprague Ave in the SE North Metro corridor.

Market asking rents average $21.52 per square foot — essentially flat year-over-year at +0.7%, but grounded by Spokane’s 10-year cumulative outperformance of +33.6% versus +18.0% nationally. Class A commands $27.59 per square foot; Class B runs $23.02; Class C averages $19.60. South Hill leads at $23.92 per square foot, while West Plains shows the fastest rent growth at +1.4%.

The 12-month net absorption of negative 10,180 square feet reflects modest tenant contraction in older Class B and C buildings, while Class A and newer 3-Star product absorbs positively. South Hill led at +23,333 square feet. The Valley added +21,767 square feet. The Spokane CBD posted +19,469 square feet of positive absorption despite 11.3% vacancy, as repositioning activity and new leasing offset move-outs.

Spokane Office Vacancy, Rents & Absorption — Q1 2026

South Hill carries just 2.6% vacancy — the tightest in the market — paired with the highest asking rents at $23.92 per square foot and net absorption of +23,333 square feet. Providence and MultiCare anchor this corridor. The healthcare ecosystem here is self-reinforcing, making it the most durable submarket in the Inland Northwest.

The Valley — Spokane’s largest submarket at 24.8% of total inventory — shows balanced fundamentals: 7.4% vacancy, $21.43 per square foot, and +21,767 square feet of absorption. The F5 Building delivery in May 2026 adds a meaningful block of preleased occupied space. At $20.2 million in trailing 12-month sales volume, the Valley is also the most liquid transaction submarket in the region.

The Spokane CBD carries 11.3% vacancy but posted positive absorption of +19,469 square feet. RenCorp’s $2.27 million ($22 per square foot) acquisition of 102,132-square-foot 111 N Wall Street signals that distressed CBD product is attracting repositioning capital at the right price.

The SE North Metro corridor posted the market’s weakest absorption at negative 84,702 square feet as tenants consolidate out of older Class B product. West Plains is tight at 5.8% vacancy but ran negative absorption — a timing effect the F5 Building and Aerospace Tech Hub activity should begin reversing in the second half of 2026.

Office Property Sales in Spokane — Recent Transactions

Forty-five office transactions closed over the trailing 12 months totaling $65.1 million — well below the five-year average of $102 million, reflecting elevated borrowing costs and limited institutional appetite for the office sector nationally.

The critical context: owner-user purchases have dominated recent volume and are distorting the reported average transaction cap rate of 7.1%. Washington State University’s $8.25 million purchase of the WSU Innovation Center ($211 per square foot) and the Spokane School District’s $12.2 million acquisition of Riverpoint One were both owner-user deals with no cap rate. Do not use these prices to benchmark investment-grade asset acquisitions.

For investment underwriting, use the pure investment comps: 11919 Sunset (West Plains, $7.5M, 6.4% cap, 100% leased, 1031 exchange); 14408 E Sprague Avenue (Valley, $5.72M, 7.5% cap, NNN); 5615 W Sunset Highway ($6.1M, 7.5% cap, NNN). Investment-grade stabilized assets in the Spokane office market are trading at 6.4-7.5% cap rates. Buyer composition: 88% local, 12% national — institutional capital is sidelined.

Office Cap Rates & Investment Activity — Inland Northwest

The Federal Reserve held rates at 3.50-3.75% at its March 2026 meeting. The 10-year Treasury stands at 4.31% as of early April 2026. Lenders are requiring 1.20-1.25x DSCR on current net effective rents with no pro-forma credit. LTV availability: 60-65% for stabilized office. CoStar’s market model cap rate: 10.2%. Transaction cap rates for stabilized quality assets: 6.4-7.5%.

Life company capital is actively deployed in 2026 for well-tenanted stabilized assets. CMBS remains selective on office outside gateway markets. The Fed dot plot projects one cut in Q4 2026 — if delivered, the second half of the year could see a meaningful uptick in transaction activity as buyers waiting for better entry timing begin to move.

Inland Northwest Office Market Forecast — 2026

The structural case for the Spokane office market remains intact: constrained supply, in-person tenant base, historically higher cap rates, and a growing regional economy. CoStar’s forward model projects modest positive absorption for full-year 2026, with vacancy stabilizing near current levels before tightening through 2027-2028. Rent growth is forecast to recover from 0.7% currently to approximately 2.4% annually by 2030.

Key risks: Class A vacancy at 16.2% signals demand softness even in best-in-class product, and federal Medicaid policy is the primary economic risk given healthcare’s one-in-five share of regional employment. Key upside: the Spokane Aerospace Tech Hub — Senate-approved up to $70 million for ~50 advanced manufacturing companies — would drive demand for R&D and small office product in West Plains and the University District.

For property owners: quality assets in the Spokane office market are unlikely to reprice meaningfully lower from here. (For comparable analysis on the industrial side, see our Spokane Industrial Market Report Q1 2026.) The supply discipline, durable tenant demand, and historically higher cap rates create a window for acquisition at current terms that may close as activity picks up in H2 2026.

Spokane Office Real Estate Broker — Eric Peterson, ACTIV8 Real Estate, LLC

Eric Peterson is the Designated Broker and President of ACTIV8 Real Estate, LLC, based in Liberty Lake, Washington. Eric advises commercial real estate owners, investors, and tenants across Eastern Washington and North Idaho, covering office, retail, industrial, and investment property throughout the Inland Northwest.

ACTIV8 produces quarterly and annual market reports for Spokane and Coeur d’Alene across all four commercial property types, combining CoStar data with direct field intelligence to give clients a ground-level view of what the market is actually doing.

Data: CoStar | Q1 2026 | ACTIV8 Real Estate, LLC | [email protected] | 509-903-9077 | ACTIV8RE.com