Elevated interest rates are behind market slowdowns across both commercial and residential real estate sectors in Spokane and Kootenai counties this year, according to some real estate industry specialists.

Dave Black, CEO of Spokane-based commercial brokerage company NAI Black, says, "Business is about half of what it was in 2021 and even 2022 ... which were actually record years for us."

Commercial real estate activity was substantially better during the pandemic, carried by strong industrial and investment markets, says Black, adding that interest rates have slowed commercial activity in those markets and others in 2023.

In the hospitality and retail real estate markets, vacancies are on the rise with closures of several restaurants and brick-and-mortar retail establishments.

Occupancy rates have stabilized at about 95% for multifamily properties, down from highs of 99% to 100% during the pandemic, Black says.

"We're at more normal levels now," he says of multifamily occupancy rates. "New projects are harder to lease up than they were, and rents are remaining fairly flat."

As the 2024 presidential election approaches, a significant drop of interest rates is unlikely, Black says, but he does expect to see rates trend slightly lower.

Jared McFarland, board president of the Coeur d'Alene Regional Realtors, says many people are waiting out the election year, and he anticipates residential real estate likely will continue to slow in 2024.

McFarland, who also is an agent at Coeur d'Alene-based Century 21 Beutler & Associates, says contraction provides relief to homebuyers.