In the construction realm, the initial burst of permitting activity at the start of the year has now given way to a notable slowdown. This slowdown is projected to stabilize in 2025, presenting a mix of resilience in the private sector and uncertainty for state transportation projects. Cheryl Stewart, executive director at Associated General Contractors Inland Northwest, highlights the impact of a bidding freeze on new transportation projects called for by the Washington state Department of Transportation. This freeze is likely to hamper infrastructure construction activity in the coming year. Notably, the next two phases of work on the North Spokane Corridor are being affected by this bidding pause, which has a huge impact on the industry as about $250 million in halted projects are at stake. Despite the freeze, some funding has been secured for other road maintenance and preservation work.

Private vs. State Construction: Resilience and Uncertainty

Private commercial construction activity in Eastern Washington next year is expected to be more resilient compared to state transportation projects. It will include an array of facilities such as multifamily, manufacturing, data center, and warehouse. The new year will also bring about continued wage growth, rising material and land prices, and higher financing costs, all contributing to the rise in construction costs. A lack of skilled labor will also impact commercial project costs and timelines in 2025. However, AGC's apprenticeship programs and youth outreach efforts are making a difference in the school-to-workforce pipeline.In contrast, state transportation projects face uncertainty. A projected revenue shortfall in Washington state and potential federal policy changes focused on immigration and tariffs are likely to contribute to a slowdown in construction activity in the Spokane area compared to the last two years.

Residential Construction: Growth and Cooling

The residential construction sector in Spokane County has shown year-over-year growth. From January to October 2024, 11% more residential units were permitted compared to the same period last year. Joel White, executive officer of the Spokane Home Builders Association, notes that multifamily permits are up over 12%, showing signs of stabilization after significant growth in 2022 and 2023. However, permits for duplexes and the number of duplex units declined about 28%, while the number of total units increased about 16% despite a slight decline in multifamily structure permits. Single-family permits also increased by 9% in the first three quarters. Although overall residential construction activity has increased, it has started to cool down after an initial uptick. Preemptive permit filings by builders in early 2024 were fueled by the need to get ahead of new building code changes. Residential construction in the new year will be affected by housing affordability challenges, with a shift away from owner-occupied units. This shift is driven by investor preference, affordability, and changing demographics. Builders are now looking at developing more duplexes and accessory dwelling units on single-family lots and repurposing vacant office space into residential use.

City of Spokane Public Works: Priorities and Projects

In the city of Spokane, nearly 30 new and ongoing projects worth about $61.5 million are planned for 2025. The city is prioritizing pedestrian and bicycle safety, road resurfacing, and utility infrastructure improvements. Marlene Feist, public works director, mentions that the city's public works spending is down from about $110 million in 2024 due to the completion of several key projects this year. Despite the reduced value, there is a strong pipeline of public works projects and funding opportunities in 2025, which brings optimism. Public works projects in the new year will address community concerns in the Latah Valley neighborhood with the installation of a $2 million J-turn. Work valued at about $8 million is planned to relocate water and sewer lines for the North Spokane Corridor, and a $4.5 million water booster station will support growth on the West Plains. A $3.5 million streetscape project will enhance sidewalks, lighting, and trees on Lincoln Street to create a pedestrian-friendly connection. The public works department also aims to seek grant funding for the upcoming $65 million Latah Bridge replacement project.