Like February skies, the forecast for Spokane and North Idaho’s real estate market is cloudy for the rest of 2012 except for a few bright spots, according to speakers at Tuesday’s annual Real Estate Market Forum at the Coeur d’Alene Resort.
About a dozen speakers at the event said 2012 will be a slow, spotty climb and not a full-blown recovery. Most said the housing market and the overall job picture won’t approach normal growth rates until 2013.
Two economists handicapping Spokane’s job market said they expect growth of no more than half of 1 percent for 2012.
After losing about 4,000 jobs in 2009, Kootenai County’s job picture has stabilized, but is also not roaring. Alivia Body, Idaho’s Department of Labor regional economist, projects a half of 1 percent job growth in Kootenai County this year.
One of the brightest spots in the mix is Spokane’s bubbling retail sector, said Chris Bell, NAI Black managing broker.
Led by strong retailers such as Trader Joe’s, Apple, Ross Dress for Less and The North Face, Spokane’s retail picture is bright and looks to get stronger, Bell said.
National and area retailers are responding to investors and to consumers by building new locations across Spokane, Bell said.
Affordable retail space in the area makes companies and entrepreneurs willing to get ahead of the recovery by setting up stores here, he added.
“The good news is that these retailers don’t seem to be waiting for things to turn around,” he said. “They’re busting at the seams to fulfill their requirements for new store openings, and Spokane is on sale.”
Bell said a number of national retailers are kicking tires and scouting new locations, including Dick’s Sporting Goods, Camping World and H&M clothing stores.
Restaurants are also expanding, including a large number launched by local business owners. That boom, Bell said, “shows that the entrepreneurial spirit is alive” in the area.
Regional and national chains also are adding new locations; Chipotle Mexican Grill is about to open a store near Gonzaga University, and Montana-based MacKenzie River Pizza has recently added a new restaurant on Spokane’s South Hill.
Bell said he believes the Spokane area has more than 700 different restaurants that employ about 14,000 people.
Another source of upbeat news is the apartment market. Demand has grown for multifamily housing in Spokane and Kootenai counties, with the result that rental rates have increased since 2009, said Jason Jackson, property manager of Black Realty Management.
Jackson said it’s likely that trend will continue at least through 2012, as more baby boomers look to downsize their dwellings and the economy continues to constrain the pocketbooks of would-be homebuyers.
Those tracking Spokane and North Idaho’s commercial office space market were not as hopeful, however.
Marc Mowrer, of Kiemle & Hagood Co., noted that Spokane’s overall office space market has a 16 percent vacancy rate. The area with the most vacancies, he added, is Spokane Valley, with a vacancy rate of 21 percent. That’s the highest ever in Spokane Valley going back as far as anyone has kept records, he said after his presentation.
Mowrer and Pat Eberlin, who tracks commercial activity in North Idaho for Coldwell Banker Schneidmiller Realty, both see 2012 continuing last year’s pattern of businesses in Class B offices upgrading and relocating in Class A office space. They do that, in large part, because landlords can’t raise rents on Class A space, and are frequently willing to offer deals to get tenants, he said.
Two examples, according to Mowrer, were major relocations by Telect Inc. into Class A offices at the Liberty Lake Commercial Building and Liberty Mutual relocating workers from two Spokane area buildings into remodeled space at the Meadowwood Technology Campus in Liberty Lake.