The Office market in the Coeur d’Alene region is expected to remain steady but supply-constrained due to high construction costs. While 163,000 square feet of new office space was delivered in 2024—36 percent of which was speculative—future speculative development is likely to be limited as developers remain cautious. Currently, only 45,000 square feet of office space is planned or under construction, with owner-users driving most new projects.
North Idaho’s Industrial market is expected to remain tenant-favorable as high vacancy levels are likely to put downward pressure on lease rates. Overall lease rates have dropped 3 percent, from $1.00 per square foot to $0.95 per square foot (NNN, monthly), with Post Falls seeing the lowest rates at $0.93 per square foot, where vacancy remains an elevated 31.2 percent. While there is pent-up demand from local businesses looking to expand, high costs have made it difficult for tenants to grow.
The lack of new inventory resulted in an overall vacancy rate of 2.1 percent at the close of 2024, while unanchored vacancy decreased from 4.1 to 3.4 percent year over year. Demand in the retail sector is expected to remain healthy; however, a shortage of supply is likely to keep lease rates elevated throughout 2025, potentially creating challenges for local retailers. The average asking lease rate is $21.00 per square foot (NNN, annual), with Class A space averaging $24.50 per square foot, and some properties asking as much as $35.00 per square foot.
As of March 2025, the Federal Reserve has kept the federal funds rate at 4.25 to 4.5 percent. This decision comes after a series of three rate cuts in late 2024, which included a 50 basis point reduction in September and two 25 basis point cuts in November and December. Most experts predict that the Fed will hold rates steady through the first half of the year, as inflation has slowed but not enough to justify significant rate cuts. Overall, there remains a level of uncertainty around inflation and economic growth, keeping investors cautious.
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