Published by Acre Commercial (ACRE) | July 2026 | Spokane, WA
Estimated read time: 7 minutes | Category: Retail Market Report
Retail vacancy rates get quoted constantly, but on their own they can mislead as easily as they inform. A market with rising vacancy but strong rent growth is telling a very different story than one with low vacancy and flat rents, and in 2026, both Spokane and Coeur d’Alene are showing signals that require reading the underlying construction and leasing data, not just the headline number.
Spokane’s retail market posted a 5.4% vacancy rate in Q1 2026 alongside $114 million in sales activity. That vacancy sits above the market’s historical average, which on the surface reads as softening. But the construction data tells a very different story: only 27,468 square feet of retail space is currently under construction across two projects, compared to a 130,000 square foot historical average. Retail supply in Spokane has nearly stopped growing, which changes how that vacancy figure should be interpreted.
ACRE tracks retail leasing, vacancy, and construction activity across Spokane, Spokane Valley, and the North Idaho panhandle every quarter. Here’s what the current data means for investors and tenants evaluating retail space in this market.
Spokane’s Vacancy Number Needs Context
A meaningful chunk of Spokane’s current vacancy traces back to a single, specific event: a 146,000 square foot former Burlington Coat Factory location was converted to self-storage after Burlington relocated into a smaller space within the same shopping center. That kind of large-block conversion mechanically pushes up reported retail vacancy even though it reflects a single tenant’s space decision, not a market-wide demand problem.
Strip that kind of one-off event out, and the more telling number is submarket-level performance. Spokane Valley is the tightest submarket in the region at 3.2% vacancy, a level that reflects genuine, broad-based tenant demand rather than statistical noise from a single large conversion.
Why Construction Has Nearly Stopped
The gap between Spokane’s 27,468 square feet under construction and its 130,000 square foot historical average is the most important data point in this market right now. Developers have pulled back sharply on new retail construction, which means that even modest tenant demand growth from here will tighten vacancy quickly, since there’s very little new supply coming to compete with existing space.
For owners of well-located, existing retail product, that’s a favorable setup: minimal new competition combined with a submarket like Spokane Valley already running near full occupancy. For investors evaluating retail construction or ground-up development, it’s a signal to underwrite conservatively on lease-up timelines until tenant demand data shows clearer improvement, since limited construction reflects lender and developer caution about current absorption, not just capital constraints.
Coeur d’Alene: A Smaller, Tighter Market
Coeur d’Alene’s retail market looks structurally different from Spokane’s. Office currently accounts for the largest share of local commercial space available for lease, with industrial second, meaning retail supply is comparatively limited to begin with, 19 listings totaling 107,348 square feet available for lease, plus 6 retail properties currently for sale.
That scarcity of available retail space is compounded by demographic tailwinds: Kootenai County, where Coeur d’Alene sits, is the third-fastest growing county in Idaho. A smaller, tighter retail inventory paired with strong population growth is generally a setup that favors existing landlords and makes new retail development, where sites and entitlements allow it, an attractive proposition for investors willing to take on development risk in exchange for capturing rent growth ahead of a still-emerging market.
Rent Growth Is the Number to Watch Next
Vacancy and construction data both point toward the same conclusion for Spokane: a market where supply has essentially stopped growing while demand, outside of the Burlington-driven anomaly, remains broadly stable. That combination typically precedes rent growth, even if it hasn’t shown up decisively in the data yet. Investors and tenants negotiating retail leases in Spokane over the next several quarters should expect landlords to have more pricing leverage than the headline 5.4% vacancy figure alone would suggest, particularly in tighter submarkets like Spokane Valley.
In Coeur d’Alene, the smaller available inventory combined with strong population growth suggests similar upward pressure on rents, even though the market’s overall retail base is small enough that individual transactions can move the data more than in a larger market like Spokane.
What This Means for Retail Investors and Tenants
For investors, the current environment favors owning existing, well-located retail product over building new, given how sharply construction has pulled back relative to historical norms. For business owners evaluating a lease, this is a window where negotiating power still exists in Spokane’s less tight submarkets, but that window is narrowing as construction stays scarce and demand holds steady. For developers, the math on new retail construction only pencils today in the tightest submarkets, like Spokane Valley or Coeur d’Alene, where existing scarcity already supports the rents a new project would need.
Frequently Asked Questions: Spokane and Coeur d’Alene Retail Market
Why did Spokane’s retail vacancy rate go up if demand is strong?
A significant portion of the increase traces to a single event: a 146,000 square foot former Burlington Coat Factory space was converted to self-storage after the tenant relocated within the same center. This kind of large single-tenant conversion can push up reported vacancy without reflecting a broader weakening in retail demand.
Is Spokane a good market for retail real estate investment right now?
Retail construction in Spokane has slowed sharply, with only 27,468 square feet under construction against a 130,000 square foot historical average. Combined with a tight 3.2% vacancy rate in Spokane Valley, this points toward limited new competition and potential rent growth for owners of existing, well-located retail product, though new ground-up construction still requires conservative lease-up assumptions.
How does the Coeur d’Alene retail market compare to Spokane’s?
Coeur d’Alene’s retail market is considerably smaller, with about 107,000 square feet currently available for lease across 19 listings. Retail supply is more limited relative to office and industrial space in that market, and Kootenai County’s rapid population growth, the third-fastest in Idaho, suggests continued upward pressure on rents in a market with a naturally tighter retail base.
How Acre Commercial Helps Retail Investors and Tenants
Acre Commercial tracks retail vacancy, construction activity, and lease comps across Spokane, Spokane Valley, and North Idaho every quarter, giving clients the submarket-level detail needed to interpret headline vacancy numbers correctly rather than taking them at face value. We help investors identify where limited new construction is setting up future rent growth, and help tenants understand where genuine negotiating leverage still exists before it narrows further.
Whether you’re acquiring an existing retail center, evaluating a ground-up development site, or negotiating a new lease, our team can walk through current submarket data specific to your target location.
Contact Acre Commercial: 43560.com
The headline vacancy number in both Spokane and Coeur d’Alene understates how tight these markets are becoming in their strongest submarkets. Investors and tenants who dig past the market-wide average, into submarket vacancy, construction pipeline, and the specific events driving reported numbers, will make better decisions than those reacting to the topline figure alone.
