Northern Idaho has long held a captivating allure, especially with the picturesque background of the Selkirk Mountains and the world-renowned Lake Pend Oreille and Lake Coeur d’Alene. A northwest charm, coupled with vibrant communities and a relaxed lifestyle, fueled an increase in commercial real estate activity in recent years. But with a changing economic landscape, Northern Idaho’s commercial real estate market has slowed its pace of growth to a more sustainable cadence.
We’ve seen a shift from the meteoric surge in leasing and sales activity witnessed in the 2020-2022 markets. The rapid price appreciation and fierce bidding wars fueled by historically low interest rates of the early 2020s have abated and we now find the market in a period of adjustment. Rising interest rates have tempered investor buying appetites and business expansions, ushering in more healthy market conditions.
While not as fevered as previous years, we need to distinguish this adjustment from a potential market downturn. Northern Idaho has core strengths—breathtaking natural amenities, a growing job market, and a favorable tax environment—that continue to exert a pull on potential residents. To gain an understanding of the future, there needs to be a deeper analysis of the factors shaping this maturing commercial real estate market.
Demographic Trends in Northern Idaho
As Idaho’s population approaches two million, northern Idaho is experiencing a boom fueled by a younger population. The region boasts a strong job market, particularly in technology, manufacturing, and agriculture, which attracts new residents. A somewhat (comparatively) lower cost of living and beautiful natural environment also make it a popular destination. This trend is expected to continue, with Kootenai County being the third fastest-growing county in Idaho and 70 percent of its residents under 55.
Key Drivers for Future Real Estate Growth
North Idaho's real estate market is primed for continued growth, fueled by several key factors including infrastructure developments, technological advancements, and a favorable business climate and investment.
Strong infrastructure—like the I-90/US-95 junction—aids logistics and businesses with future upgrades only enhancing connectivity further. Reliable high-speed internet is crucial for the growing remote work trend, which is and will continue to attract new residents and boost housing demand. Plus, North Idaho's favorable tax environment and job market growth—particularly in technology and renewable energy—are attractive for businesses and their workers. This creates a need for more housing regarding the workforce, but also the potential for vacation rentals to support a rising and thriving tourism industry.
Emerging Sectors and Opportunities
Northern Idaho has promising sectors and opportunities when it comes to retail and mixed-use developments, industrial and warehousing businesses, and office spaces helpful to remote workers.
Retail and Mixed-Use Developments
The retail landscape is evolving and while traditional stores may need to adapt, the area's growing population creates a prime opportunity for niche retailers catering to specific interests, like outdoor gear, wellness, or locally made products.
The trend towards mixed-use developments—combining residences, shops, and offices—is gaining momentum. These create communities that cater to young professionals and those seeking a convenient, integrated lifestyle. Think about having everything you need within walking distance, or at the very least, a very short drive. Retailers’ focus is shifting from strictly goods to experiences. Commercial developments that incorporate entertainment, dining, and community spaces alongside shops are in a great position to succeed.
Industrial and Warehousing
North Idaho's strategic location near I-90 and US-95 makes it ideal real estate for industrial and warehousing businesses. This close proximity means easy access to regional markets and sets them up to capitalize on the booming e-commerce industry, which needs fulfillment centers and logistics hubs. The region's growing population offers a ready workforce for these facilities, while lower operating costs also attract some manufacturing companies.
Office Spaces and Remote Work
North Idaho cities like Coeur d’Alene, Post Falls and Hayden offer an attractive lifestyle, giving remote workers the opportunity to thrive. The rise of remote workers nationwide creates demand for flexible workspace solutions—like co-working spaces and business centers—which are likely to increase. There is also a booming tech sector that could not only attract technology-based businesses but the workers that come with them.
Challenges and Considerations
While there are plenty of advantages in what seems like a bright real estate future, North Idaho's commercial real estate boom comes with its own set of hurdles. Developers must navigate environmental regulations, secure planning and zoning approvals, navigate water rights, and potentially lengthy permitting processes. Financing challenges facing new developments include rising interest rates and higher construction costs. There are also market fluctuations and competition from publicly traded REITs and national developers that add to the uncertainty.
If you’re interested in commercial property in northern Idaho, check out our Properties page here. To contact our office in Coeur d’Alene click here.