After what he terms “an exceptional year,” Robert Hollister, Hines Interests’ director of development for the Puget Sound region, is expecting more of the same but at a more sustainable pace.

Hines’ Eleven-One-Eleven 4th is a 300,000-square-foot spec project in Bellevue. The building, which is in design, could break ground as soon as August.

For 2001, “We’re looking for opportunities on both sides of the lake,” he says, while continuing to focus on two projects under construction: the IDX Tower downtown and the 112th@12th building in Bellevue.

The 480,000-square-foot 112th@12th project was substantially a spec project that, says Hollister, went from 20 percent leased to 98 percent leased last year. One of the building’s initial tenants, HomeGrocer.com, gave back 84,000 square feet this past August. But, indicative of the kind of year 2000 was, the space was quickly snapped up by Onyx.

The IDX Tower was substantially preleased by the healthcare software company IDX Systems and joined by other blue chip tenants like Deloitte & Touche and Preston, Gates & Ellis.

Hines also has another Bellevue spec project, the 300,000-square-foot Eleven-One-Eleven 4th, in design. It could break ground as soon as August.

Hines will also be looking for acquisitions in 2001, says Hollister.

“We may be more active as a buyer of buildings than as a developer of buildings over the next 12 months,” he says. For Hollister, rental rates over the next year loom as the “$64,000 question” He thinks that rents are going to be “pretty flat” on the Eastside, while Seattle should see some increases.

“In Seattle, rents will go up still; there’s some sublease space but little under construction that isn’t already leased.” Still, he says, “It will be a more balanced market. Tenants are going to have a lot more options in 2001.” “2000 was an unbelievably favorable year for landlords,” but, to use Alan Greenspan’s term, Hollister thinks “the irrational exuberance of last year is going to be gone.”

And with uncertainty in the economy, Hollister is thankful for Hines’ financial muscle. The company typically finances an entire project, from land acquisition through construction and occupancy, with subscription financing from Hines itself and other partners.

“It is a time where I appreciate the way we finance ourselves,” says Hollister.

Hollister also thinks that 2001 will be a year where we’ll see how well the market has learned the lessons of the real estate crash of the early ‘90s and “how the [real estate] financial markets react to the slowdown in the economy.

“The institutional investors I talk to have two major priorities,” he says, “diversity away from the stock market and diversity away from office properties.

“This is a year that gets put to the test.”