With dot-com fallout, Boeing layoffs, economic downturn and Sept. 11, founding member Steve Hisken says 2001 was a year for Washington Partners to focus on the basics.

Hisken

“The economy just turned on a dime,” Hisken said. “We went from 1 percent to 14 percent vacancy overnight.”

Established in 1997 by Seattle commercial real estate brokers Hisken, Ed Curtis, Doug Hanafin and Patrick Pendergast, Washington Partners represents tenants and helps landlords retain and fill vacancies in new and existing buildings.

The business, which opened its second location in Bellevue last year, first surged as firms scurried to lease out space and bid up prices. More recently, a surplus of space spawned a tenants’ market. Direct vacancy rates that began 2001 at less than 4 percent hit nearly 8 percent by year’s end, giving Seattle about 1.8 million more square feet of open office space than it had the year before.

Many businesses once expanding scaled back or shut down. Sublease space rose to about 2 million square feet — 6 percent of the total market. As leases ended last year, Hisken said, some clients chose to rent month-to-month rather than move or commit to three- or five-year renewals.

In interest of cash flow, Hisken said, landlords agreed to the terms.

“A fair number of clients are treading water right now,” Hisken said.

Washington Partners has been waiting for signs of an economic turnaround, Hisken said. He thinks this year looks better.

After months of delay, he said clients are making real estate decisions.

The firm’s latest newsletter advises clients to lock in long-term interest rates and consider projects flexible for growth and contraction. The most competitive deals, it advises, are available through the first half of this year.

Hisken said he thinks Puget Sound rental rates will hit bottom in six to 18 months. But he doubts rates and landlord concessions will compare with what Seattle offered in the mid- to late-1980s, when new office space sprouted in several big projects downtown.

“I’ll always be bullish about the Northwest economy,” Hisken said. “We’re staying focused on the best interests of our clients and getting the most competitive deals we can. The market will reach an equilibrium sooner or later.”