If bad things do happen in groups of three, then the commercial real estate market on Bainbridge Island can breathe easier for awhile.

Last year brought a triple whammy, which suggests that this year, things have to get better. And professionals in the field say that’s exactly what is happening.

“There is more activity now than there has been in the last two years,” said commercial real estate broker Jerry Knipe of the Sunrise Group. “People seem to be feeling good about the future of Bainbridge Island.”

It’s hard to see how more things could go wrong than what has happened in the last 12 months.

First, the island market softened in response to the dot-com collapse in Seattle. Then the September terrorist attacks brought the market to a complete standstill. To top things off, the island’s single biggest tenant disappeared when the HMC/Znetix operation collapsed.

As a result, the commercial vacancy rate on the island has reached stunning proportions – an estimated 25 percent, Knipe said, after a period of several years in the late ‘90s when the vacancy rate was stuck at about 2 percent.

“For a number of years, the market was able to absorb the new space that came on line,” he said. “But now, if the market absorbs space at the usual rate of 10,000-15,000 square feet per year, it could take us four years to work off the backlog.”

The 2 percent vacancy rate had risen to 10 percent by this time last year, Knipe said, because of the huge availability of sublease space in Seattle.

“You had a situation where companies like Amazon and RealNetworks were giving up tens of thousands of square feet of space,” he said. “They may have leased it for $30 per foot, but were subleasing for half that amount. Seattle high-rise space was cheaper than Bainbridge space.”

Things were rebounding a bit in the summer, he said, when the September terrorist attacks occurred.

“”That was like hitting a switch – everything went off immediately,” Knipe said. “Everybody who was planning to move or expand just put everything on hold.”

The final blow came in February when the Kevin Lawrence companies, including HMC, Znetix and HPC, were put into receivership by a Seattle federal judge.

Those companies were leasing close to 10 percent of the island’s roughly 250,000 square feet of general office space, said Knipe, who wrote many of the leases.

“Every time someone had a large block of space to lease, Kevin would be interested in it. He said he had big plans.”

Most of those leases were negotiated at the peak of the market, Knipe said. Court documents show that the Lawrence entities were paying close to $30 per foot annually for the roughly 9,000 square feet of space Znetix was leasing in the Wharfside Building on Parfitt Way, and $25 per foot for the 12,000 square feet being leased in the Pavilion.

“Those numbers are quite a bit more than today’s market will bear,” said Knipe. “The landlords that recognize that and lower their rents will fill their spaces. An average tenant now looking for 1,000 square feet might have half a dozen choices, where a few months ago they might have had one choice.”

Pavilion co-owner Jeff Brein says he and his partners share that view.

“In a buyer’s market, you can either maintain your prices and hope someone comes along, or you can make deals. We’ve done the latter, hoping that people will have a good experience and will re-lease.

“Vacancies are a lose-lose situation, in which you lose both revenue and traffic. You need both for your project to succeed.”

The market for retail space is stronger than the market for office space, Knipe said, with vacancies still low. But even in that market, softening is noticeable – a vacancy on Winslow Way and one in the Village contrast with the situation last year, when there were waiting lists for space in both those areas.

What has not changed, Knipe said, is long-term optimism.

“Our biggest source of business during the last year has been from investors looking to buy quality office buildings,” he said, referring to sales of the Custom Printing building, the San Juan Building, and the Ericksen office park between Wyatt and the BPA Playhouse.

And new projects are still coming on line. Last year saw completion of the 11,500-square-foot Seabord Buildings on Ericksen Avenue.

On the way in the coming year are the mixed-use “Re-Doogal’s” project at Ericksen and Winslow Way, which Knipe said has generated “a lot of interest” because of its location.

Also in the planning stages is the Harbor Square project, which could put as much as 25,000 square feet of retail and commercial space and more than 150 condominiums on a five-acre parcel immediately north of the ferry terminal.

“They can’t create any more land,” Knipe said. “In the long run, people are very optimistic about Bainbridge’s future. I’m feeling a lot better now than I was a few months ago.”