Eastern Idaho’s commercial real estate market posted gains across several sectors during the first half of 2026. Office vacancy declined, retail absorption returned to positive territory, and land transactions accelerated. Industrial demand moderated as the market continued to absorb recently delivered space.
TOK Commercial’s Midyear 2026 Eastern Idaho Market Report highlights how these trends are shaping the region’s office, industrial, retail, and land markets.
Eastern Idaho’s office market recorded 44,000 square feet of positive net absorption through June. Overall vacancy fell to 4.5%, down from 5.4% a year earlier, as leasing activity outpaced additions to available inventory.
Nearly 40,000 square feet of office construction was delivered during the first half of the year. Medical-related development accounted for approximately two-thirds of that space, while only 3,000 square feet was developed speculatively.
Average asking lease rates reached $15.50 per square foot annually on a triple-net basis, up 3% year over year and unchanged from year-end 2025. The River submarket commanded the region’s highest average asking rate at $22.25 per square foot.
Healthcare users remain an important source of office demand, while limited speculative construction is helping keep new supply in check.
Industrial net absorption totaled 176,000 square feet through June, down 50% from the same period in 2025. New deliveries totaled 144,000 square feet, with more than 65% entering the market as speculative space.
Idaho Falls’ multitenant industrial vacancy rose to 7.3%, compared with 6.7% a year earlier. Average Class A asking lease rates held steady at $1.00 per square foot per month on a triple-net basis.
Activity varied by location and space size. North Idaho Falls accounted for more than 40% of transactions, most involving spaces smaller than 2,000 square feet. South Idaho Falls led the region in net absorption with 51,000 square feet, supported by larger transactions such as Dixon Container Supply’s 24,000-square-foot lease at Heyrend Industrial Park.
These differences underscore the importance of evaluating industrial opportunities by submarket and building size.
Eastern Idaho’s retail market recorded 55,000 square feet of positive net absorption in the first half of 2026, reversing the negative absorption reported during the same period last year.
Retail vacancy stood at 4.3%, down from 5.0% a year earlier but above the 3.5% recorded at year-end 2025. The increase since year-end was largely driven by two Grocery Outlet closures in Idaho Falls and Pocatello, which added 39,000 square feet of vacant space.
Notable move-ins included HomeGoods’ entry into Eastern Idaho, occupying the former 24,000-square-foot Joann Fabrics location in Idaho Falls. Les Schwab also expanded its regional presence with a new 10,600-square-foot store in South Idaho Falls.
Additional locations, local startups, and relocations accounted for more than 85% of retail transactions tracked over the past 12 months. South Idaho Falls led transaction volume, with the established Hitt Road corridor continuing to attract retailers.
Land activity accelerated during the first half of 2026. More than 117 acres traded for $17.6 million, representing more than three times the transaction volume and twice the total sale consideration recorded during the same period in 2025.
Residential permitting also strengthened. Single-family permit value increased 12% year over year to $87 million, while multifamily permitting rose 84% to 714 units valued at $88 million.
Idaho Falls led multifamily activity in both units and permit value, supported by construction of the 170-unit Affinity project. Rexburg and Pocatello also recorded increased multifamily permitting, pointing to development interest beyond the Idaho Falls metropolitan area.
The first half of 2026 showed that Eastern Idaho’s commercial real estate markets are moving at different speeds. Healthcare demand supported office occupancy, retail activity improved despite several closures, and industrial leasing continued at a slower pace. Increased land transactions and residential permitting added to the region’s development activity.
For owners, tenants, and investors, understanding the conditions in a specific submarket remains essential to evaluating an opportunity.
Connect with TOK Commercial’s Eastern Idaho team at (208) 227-8148 to discuss how these market trends relate to your next lease, sale, acquisition, or development project.