The Inland Northwest’s commercial real estate market at mid-year 2026 demonstrates measured momentum across most sectors. Our region is stabilizing, with constrained supply and steady demand defining the landscape heading into the second half of the year.
Regional Overview
The first half of 2026 brought continued, if measured, momentum to the Inland Northwest. The national economy continues expanding at roughly 2%, though tariff uncertainty, federal budget pressures, and a softening labor market temper the broader outlook. Locally, the picture is mixed.
Up Year-Over-Year
Down Year-Over-Year
Wage Growth
Year-Over-Year Increase
Data Source: Washington State Employment Security Department, Idaho Department of Labor
Employment Trends
In Spokane County, health services and private education added 1,200 jobs, while nearly every other sector regressed. The region’s labor force is essentially flat as retirements mount, and Washington’s latest revenue forecast has lowered 2027-2029 projections by $461 million, signaling slower income and employment growth ahead.
Northern Idaho presents a brighter picture, with July unemployment improving to 4.51% from 4.66% a year ago and advertised wages up 7% year-over-year to $23.57 per hour (from $21.97 in July 2025).
In the Palouse, Schweitzer Engineering drove manufacturing employment up 5.6%, while Washington State University sustains Whitman County’s economic base at approximately 30% of county employment.
Spokane Market
|
Office Vacancy
13.67%
Down From 14.09% Winter ’26 |
Retail Vacancy
6.13%
Down From 6.85% Winter ’26 |
Medical Office Vacancy
4.25%
Up From 2.53% Winter ’26 |
|
Industrial Vacancy
6.30%
Up From 4.9% Winter ’25 |
||
Data Source: Kiemle Hagood, CoStar/LoopNet
North Idaho Market
North Idaho Market
|
Retail Vacancy
1.87%
Exceptionally Tight |
Office Vacancy
4.35%
Healthy |
Industrial Vacancy
6.32%
Moderately Healthy |
Data Source: Kiemle Hagood
Tri-Cities Market
The Tri-Cities market anchors on Hanford and Pacific Northwest National Laboratory (PNNL), representing the region’s primary employment anchors with a combined contractor and research workforce of approximately 12,000-13,000. Regional economic diversification includes healthcare, consumer-facing services, government, and educational institutions, which broaden the economic base beyond the primary anchors.
With construction pipelines at multi-year lows, any renewed pickup in demand will meet constrained supply, positioning well-capitalized owners and strategic buyers favorably. Across the Tri-Cities, diversifying employment, ongoing population inflows, and rationalized growth continue to favor measured gains and strategic transactions over speculative spikes.
The Palouse Market
The Palouse market reflects steady, education-anchored equilibrium. Washington State University sustains Whitman County’s economic base with approximately 30% of county employment. Schweitzer Engineering Laboratory (SEL) drove manufacturing employment up 5.6%. The University of Idaho anchors Latah County demand.
Whitman County’s population of 48,675 holds flat through 2031, with Pullman at 33,289. Population trends across the region show minimal growth projections through 2031, with tight supply environment, institutional growth, and multi-year low construction pipelines characterizing regional market conditions.
Key Takeaways
Construction pipelines are at multi-year lows across every market surveyed in the Inland Northwest. With capital costs remaining elevated and tenants staying selective, the first half of 2026 confirms a regional market defined by stability, constrained supply, and steady demand heading into the year ahead.
Any renewed pickup in demand will meet constrained supply, positioning the region well for the next cycle of regional growth.
