Building on growth
Spokane County’s industrial real estate market has grown about 70 percent over the last three years – and a whopping 93 percent of it was in use last year, according to a recently released commercial real estate survey.
“That’s the big story in the county’s 2005 commercial real estate market,” said Scot Auble, president of Auble, Jolicoeur & Gentry Appraisal Co. and chairman of the Real Estate Research Committee, which publishes economic data on Spokane and Kootenai counties.
“The industrial segment of the market continues to experience a solid recovery after 9/11 and the dot-com crash, which really hit the industrial market hard,” Auble said.
About 15 percent of industrial buildings in the area went dark after the 2001 downturn.
Today, there’s more than 24 million square feet of industrial space in the county, up from the about 14 million square feet in 2002. While property rents have been stagnant, Auble predicts they’ll rise in 2006.
Offices and retail space make up the remainder of the commercial real estate market.
Randy Barcus, chief economist for Avista Corp., is predicting brisk commercial real estate activity this year.
“We’ve seen a dramatic uptick in interest in the Inland Northwest from out-of-area investors,” Barcus said.
“I think we’ll see a lot of ownership changes at office buildings and shopping centers. And that’s going to free up a lot of local capital to do more development.
“That’s very healthy for our community. The sales of Crescent Court and Rock Pointe developments – and there are dozens of other examples – indicate a maturation of our economy,” Barcus said.
The historic Rookery and Mohawk buildings will be among the most notable structures on the market. Spokane Mayor Dennis Hession signed an executive order in December saving them from demolition. He hopes a private developer will buy the $4.7 million parcel for downtown housing and commercial use.
Marshall Chesrown, head of Coeur d’Alene’s Black Rock Development, is pursuing plans to build more than 2,600 residential units and about 1 million square feet of commercial space on the 77-acre Kendall Yards project in Spokane. Kendall Yards will rise from the banks of the Spokane River, appealing to those who want to live, work and shop within walking distance of the city’s core.
In Spokane Valley, expect office and retail property markets to remain soft. The area’s been overbuilt, Auble said.
Kootenai County does not collect similar data on its commercial real estate market. However, developer Ryan Nipp, with Coeur d’Alene’s Parkwood Business Properties, said the market there is still sizzling. And while he predicts a slight slowdown in 2006, he anticipates another better-than-average year.
Nipp estimates that 2005 vacancy rates among Kootenai County’s Class A office space — the newest and most desirable — was a low 5 percent. The vacancy rates at older properties weren’t far behind, with Class B space at 5 to 7 percent and Class C at less than 10 percent.
“I would say that will hold true again this year, based on our portfolio and information I’ve received from other brokers and developers in town,” Nipp said.
In Coeur d’Alene, a number of major developments are in the works.
Crews will break ground as soon as weather permits for the five-story, 57,000-square-foot RiverView Tower, which is Parkwood Properties’ big project. Located along Northwest Boulevard, it will encompass four stories of high-end office space, a floor of luxury condos and two levels of underground parking.
In addition, Miller Stauffer Architects is overseeing construction of the seven-story, mixed-use Parkside development on Front Avenue. The 125,000-square-foot brick building will be anchored by NightHawk Radiology Services and will include retail shops, three floors of offices and 12 condos. It’s set to open at year’s end.
Plans also call for construction to begin in the spring on the 40,000-square-foot condo-office building known as Sherman Lofts. Located in the heart of Coeur d’Alene, the seven-story development will feature eight luxury condos, two penthouse suites and two floors of offices, said architect Mike Patano, who’s teamed with contractor Mike Dodge and investor Dean Ledger on the deal.