Spokane Office-to-Residential Conversion Plan Approved, Unlocking 700 Units of Downtown Housing

Key Takeaways

• Stringent regulations and costly retrofits threaten to stall developer interest, placing historic buildings like the Peyton Building at risk and straining water and transit systems.


• Climbing vacancies and aging infrastructure present major challenges, and the current $20 million budget may not be sufficient if construction costs continue to rise.


• Swift action is crucial to prevent further downtown decline and ensure Spokane seizes this revitalization opportunity.

 

Downtown Housing Revitalization Faces Major Hurdles

The Spokane office-to-residential conversion plan is officially approved, opening 700 new units near Riverfront Park as downtown towers sit half-empty.

Vacancy is rising, infrastructure is aging, and $20 million will not stretch far if construction costs soar higher.

Rapid action is urgent—a failure to adapt means downtown could slide further into stagnation.

The next move reveals everything.

Challenges and Opportunities in Downtown Spokane’s Transformation

A perfect storm is battering the heart of Spokane, as downtown office towers—from the shadow of Riverfront Park to the worn brick of the Peyton Building—sit half-empty and demand revival.

Changing work trends have hollowed out the iconic skyline, leaving local monuments surrounded by vacancy and uncertainty.

City leaders have approved an unprecedented office-to-residential conversion plan, opening an urgent path for 700 new housing units, yet immediate action is obstructed by harsh zoning restrictions and strained infrastructure.

What is at stake if these obstacles are not overcome?

Failure to address tight zoning regulations around mixed-use density could stifle residential growth, freezing investment and leaving entire blocks quiet at night.

Without swift community engagement, preservation advocates and business owners may clash over how new development fits with the historic bones of downtown, threatening both progress and Spokane’s character.

The new ordinance C36548—taking effect September 2024—sets the stage for transformation but requires a minimum of four affordable units in every project, placing high demands on developers already facing retrofit costs and obsolete building systems. A critical feature of the plan is that at least 10% of units must be designated as affordable, in line with Spokane’s affordability requirements and enforced by strict annual compliance rules.]

The Peyton Building, fueled by $20 million, is a bellwether project, but its narrow construction site exposes the massive hurdles involved with making older buildings livable.

Over $61 million in projects have been mapped for 2025, yet this sum is down sharply from $110 million in public works budgeted for 2024, raising alarm over future funding and the slowing pace of needed conversions.

The City’s Downtown Plan 2024 prioritizes high-density living within Olmsted’s legacy parks and brick-lined streets, seeking to attract young professionals and ignite economic revival—but only if enough residential units reach completion.

Zoning restrictions around height and use create formidable barriers, discouraging smaller developers from participating and risking a patchwork of vacant towers if left unaddressed.

Spokane’s partnerships with Spokane County’s 2025 Consolidated Plan signal a focus on affordable and low-income housing, leveraging state sales/use tax deferrals to close gaps—yet these incentives exclude commercial upgrades, forcing tough choices about mixed-use spaces.

A Resource Center exists for contractors, engineers, and developers to access construction bids, awards, permits, and project plans, including a roster of sub-bids and upcoming building permits, which provides a foundation for understanding the regional construction climate and assisting stakeholders as they navigate Spokane's conversion activity.

Historic preservation costs remain staggering, with developers forced to invest heavily to maintain facades and seismic integrity, particularly around storied sites such as the Davenport District.

Infrastructure strain from greater density threatens to overwhelm water, power, and especially transit networks, with Riverfront Park again at the epicenter if upgrades lag behind residential growth.

Are public-private coalitions strong enough to bridge funding gaps, or will isolated projects stall amid rising construction costs?

A complex web of HUD-aligned funding, homelessness aid, and leveraged tax relief forms the backbone of Spokane’s conversion strategy, but securing viable financing remains an arduous task with over 30 projects advancing simultaneously.

County initiatives targeting both rural and urban housing, including accessory dwelling units and duplexes, expand the housing supply—but face NIMBY resistance and competitive funding environments, even along long-established avenues like Monroe and Howard.

Key Takeaways: The Spokane office-to-residential plan is an urgent, high-stakes effort, battling restrictive zoning, preservation costs, and funding gaps in a city defined by icons and opportunity.

Can the community, policymakers, and investors unite in time to shape a vibrant, resilient downtown—or will inertia and regulation doom Spokane’s core to decline?

Assessment

Riverside Avenue’s skyline is transforming quickly, signaling a new chapter for downtown Spokane.

The recently approved office-to-residential conversion plan unlocks 700 housing units, but also brings big questions about shifts in demand and how the market will adapt.

If the pace of new supply surpasses demand, River Park Square and nearby areas could feel aftershocks in property values or rental rates.

It’s a time of opportunity—but also uncertainty—as redevelopment picks up speed across Spokane’s core.

Investors and potential residents should keep a close eye on these fast-moving changes because waiting too long might mean missing out or facing unexpected challenges.

Don’t Wait—Be Part of Spokane’s Next Chapter

Downtown Spokane is redefining itself, and those who stay ahead of the curve stand to benefit the most.

Whether you’re an investor, business owner, or future resident, now is the moment to position yourself for success in this evolving market.

Reach out to learn how you can become part of Spokane’s dynamic transformation before the next wave hits.

https://www.unitedstatesrealestateinvestor.com/spokane-office-to-residential-conversion-plan-approved-unlocking-700-units-downtown-housing/?fsp_sid=1819