WESTERN SNAPSHOT, APRIL 2010
TOP 5 GROWTH FACTORS FOR SPOKANE, WASHINGTON, IN 2010
With Spokane's reputation as a steady commercial real estate market, it's little wonder that Seattle investors have said they invest in Seattle for appreciation and invest in Spokane for stable income. Growth percentages have increased slightly during the years as the city's economy has changed from relying on the area's agriculture, timber and mining interests. Today some of the main economic drivers are government, healthcare, visitor and convention business, technology and biotechnology. The largest metropolitan area between Seattle and Minneapolis, Spokane has been affected by the national economic downturn, but has not seen the high level of residential and commercial foreclosures common in some other markets its size. Here are five key areas to watch in Spokane in 2010:
1. Spokane's apartment market has always been a draw to California investors and those from western Washington. In 2008, approximately $70 million in multifamily investment real estate changed ownership in Spokane County, but only $10 million did last year. With relatively low vacancy rates and cap rates higher than many other West Coast markets, Spokane's multifamily investment sector will see renewed interest from outside investors that have been waiting on the sidelines.
2. Spokane's quality healthcare providers serve a huge four-state region. This large regional draw for medical services has contributed to a very stable medical office space market. At the end of 2009, the medical office vacancy in Spokane ended the year at 7.06 percent. Medical office development, including specialty medical and dental practices, will continue at a steady pace for the foreseeable future.
3. The majority of the challenging loans made by Spokane area banks were for residential and commercial development projects outside of the Spokane market. To date, this has resulted in relatively few REO bank properties coming on the market in the area. Those that have are mostly the result of local office or retail businesses closing their doors. In the last month, significant interest in these properties from buyers, both users and investors, has become apparent. Overall, property valuations seem to be stabilizing as these properties work their way through the system to new ownership.
4. Spokane is fortunate to have a growing number of technology companies like Itron, which is the world's leading provider of solid-state water, electric and gas meters with $1.69 billion in sales in 2008, that provide consistent job growth to the area. Higher-education research and related private-sector investment in emerging technologies are strong as well. Spokane's higher-education institutions of Gonzaga University, Eastern Washington University, Whitworth University and Washington State University at Spokane have all contributed promising new technology, which along with advances by Spokane start-up companies has been fostered and funded by organizations such as the Hogan Entrepreneurial Institute at Gonzaga University and the Spokane Alliance of Angels. As a result, many new and exiting companies have been turning their ideas and technologies into growing, profitable business ventures.
5. Another growth factor is the steady in-migration of people from mostly California and western Washington, who are attracted to the affordable housing, quality of living and outdoor recreational opportunities. The in-migration to Spokane will only increase as the national economy turns around.
2010 looks to be a prosperous year of growth for Spokane's commercial real estate market, which should move ahead on its usual stable and steady track to a promising future.
Jeff Johnson is President of Black Commercial, Inc., an NAI Black company, in Spokane, Washington.
- ► 2011 (46)
- ▼ April (4)