Year in review: COVID-19’s impact on local businesses and real estate, regional economy

At the beginning of 2020, the Spokane region was primed for growth.

Spokane County’s unemployment rate was at 4.8% in December 2019. New businesses were opening, the real estate market was booming and the Spokane International Airport exceeded 4.1 million passengers last year, marking the third consecutive year of record-breaking traffic.

Then COVID-19 took hold in mid-March, prompting Gov. Jay Inslee to issue a statewide stay-at-home order.

As a result, several businesses were forced to temporarily close and lay off employees.

“The pandemic brought to a screeching halt the longest U.S. expansion in history,” said Grant Forsyth, chief economist for Avista Corp.

Prior to the pandemic, the U.S. economy had been growing for 128 continuous months beginning in June 2009.

In April, Spokane and Kootenai counties combined saw a 16% decline in nonfarm employment from pre-pandemic levels in February, marking the largest local employment drop on record.

By September, the region recovered some jobs, but as of November, employment growth was still down by about 5%, Forsyth said.

As the region rebounds from the impact of COVID-19, Forysth said a vaccine and federal stimulus package will be key to a full economic recovery.

The region is likely to see 3% or more in employment growth with both a vaccine and stimulus package.

“We have a vaccine and are so very close to a stimulus (package) … to get the biggest bang out of the economy,” Forsyth said, “we need the stimulus part to be finalized and start distributing monies.”

A reesilient real estate market

The pandemic had little effect on the region’s real estate market, which continued to experience rising prices, low inventory, high demand and multiple offers.

The region’s median closing price for the first time exceeded $300,000 in July as the coronavirus pandemic accelerated a growing trend of out-of-area buyers and remote workers moving to Spokane in search of affordable housing and a better quality of life.

The National Association of Realtors predicts the Spokane area will be one of the nation’s top-performing housing markets in the next two years as it has shown resilience during the pandemic.

Spokane County’s median closing price was $309,500 in November, a 16.8% increase from $265,000 in November 2019, according to the Spokane Association of Realtors.

The number of home sales in Spokane County increased 11.7% last month compared with last year. Some 687 single-family homes and condominiums on less than one acre sold in November, compared with 615 homes in November 2019, according to the association.

The county’s shortage of housing inventory persisted in November, dropping to a two-week supply with 335 properties on the market.

That means that it would only take two weeks to sell every home on the market. For comparison, inventory was at 1.2 months in November 2019.

Permanent business closures

The COVID-19 pandemic forced closure of several longtime local businesses.

Cassel Promotions & Signs announced in June it was closing after more than 35 years of operation, citing coronavirus-related financial impacts.

The White Elephant shuttered in July after more than 74 years in business, while Spokane Valley-based startup Stay Alfred, which popularized the concept of apartment rentals in walkable locations, permanently closed in May.

Some 121 restaurants in Spokane County permanently closed this year, according to data from the Washington Hospitality Association.

The accommodation and food service industry was the hardest hit sector of the local economy, with hotels and restaurants in the region employing 7,000 fewer employees in September, according to an October Spokesman-Review article.

Spokane County used more than $22 million of the $90 million it received in federal CARES Act funds for small business grants ranging from $2,500 to $10,000 to aid in COVID-19 relief.

Businesses pivot during pandemic

Many businesses in the region improved e-commerce operations and pivoted product lines to stay afloat during the pandemic. Others launched new enterprises:

• Spokane-based spice and rub company Spiceology has steadily grown its operations during the pandemic by creating recipes and how-to videos as more customers opted to prepare meals at home.

The company also collaborated with chefs and food influencers on new product lines, and raised $4.7 million in Series A funding in September.

• GoToTags, which creates software and data tags that can be digitally linked to smartphones and other devices, added face masks to its product line to help fill a nationwide shortage of personal protective equipment.

• Longtime family owned yearbook and photography company Dorian Studio also began producing face masks for students and teachers at West Coast elementary schools.

• Spokane residents Mariah Brooks and Gary Bailey, who were laid off from their jobs due to COVID-19, started Inland Northwest Trading Co., a monthly subscription box service featuring handmade items from regional makers.

• Ritzville native and Cal Poly student Peyton Curtis launched The Herd, a ranch-to-table boxed beef business in the summer as a response to food shortages occurring in grocery stores at the onset of the pandemic.

• Spokane Valley-based Duncan Produce found a way to retain employees and sustain operations by expanding its wholesale business to include direct-to-consumer sales via a drive-thru at the company’s facility and grocery delivery service.

Amazon, Catalyst buildings open

Amazon’s West Plains fulfillment center opened in June and is now processing and shipping more than 2 million items a week.

The 2.6 million-square-foot facility, at 10010 W. Geiger Blvd., employs more than 2,600 associates and processes orders for small to medium-sized items, such as SD cards, coffeemakers and blenders.

The fulfillment center, which has the ability to store more than 40 million products in inventory, will eventually ramp up operations to ship out more than 5 million items a week.

In October, an unnamed company filed permits with Spokane Valley to build a $101-million, Amazon-like distribution facility.

Although Amazon’s name is not attached to the building permit for the 1.3 million-square-foot structure referred to as Project Fireball-GEG2, the company’s tendency to use code names in early project designs has created speculation about its involvement in the distribution facility.

Project Fireball also has ties to companies that have worked with Amazon to develop fulfillment centers in the past.

After more than two years of construction, the five-story, 159,000-square-foot Catalyst Building, which is the state’s first net-zero commercial building made of cross-laminated timber in the state was completed in September at the base of the University District Gateway Bridge.

The Kalispel Tribe plans to break ground next year on an expansion project at Northern Quest Resort & Casino that includes a new hotel wing with nearly 200 rooms.

The new 160,000 square-foot structure will be built west of Northern Quest’s existing hotel tower and include five connected buildings.

It will bring Northern Quest’s total number of hotel rooms to 440 and create more than 150 jobs.