Casper

Imagine Snoqualmie Falls drying up overnight.

That’s about what happened to the Eastside office market at the start of 2001, says Clete Casper, managing director of the Redmond office of Carr America.

“When the year began there was a lot of interest in new development and new development opportunities and that was shut off so fast with the lack of demand and the incredible change in vacancies due to the sublease supply,” he says. “It was amazingly abrupt.”

Casper says Eastside vacancy rates jumped from 3 percent at the end of 2000 to 13 percent at the end of 2001 — and that doesn’t include the flood of subleased space unleashed on the market.

Carr America’s Redmond office, the owner, manager and/or developer of 1.7 million square feet of Eastside office and biotech lab space, fared a little better than that, notes Casper. It’s vacancy rate, including subleased space, is about 10 percent.

Still, it was a tough year. Casper says his office did not complete a single noteworthy new transaction during 2001. The market was so weak that even a rate cut wouldn’t have helped, says Casper. “We haven’t changed rates because rates have not been an issue,” he explains.

“Essentially, there has been so little demand that changing rates is really quite fruitless. It’s a matter of whether there are people in the market interested in your property.”

Casper does not expect the deals to start flowing again anytime soon. “We don’t see a silver lining right now,” he says.

“The expectation is that 2002 is going to be one of the most difficult years in some time,” he says. “The combination of the tech bubble bursting and Boeing laying off 30,000 people is a one-two punch to job growth and job growth is effectively what we’ve always tied to the [performance] of the market.”

How long before the outlook brightens?

“We expect to see moderate growth in 2004 and that is basically tied to Boeing’s projections of when they see airline orders coming back,” says Casper.