Office space on Bainbridge Island is abundant, with a good selection in an array of price ranges.

But retail space fronting on a main street or even a well-used parking lot – that’s another story, a story of considerable demand and negligible supply.

“If anyone out there is listening and wants to build a project, retail is the way to go,” said Jerry Knipe of the Sunrise Group, one of the island’s leading commercial real-estate brokers.

Dave Nelson, a commercial real-estate specialist with Windermere Real Estate, makes the same obervation.

“People are looking for retail space and can’t find it. This is more visible space that is demanded by people with a straight retail or a service-oriented operation,” he said.

Winslow Way, the island’s traditional retail center, is full, they agree.

“You see an occasional vacancy on Winslow Way, but very few ‘for lease’ signs,” Knipe said. “Those spaces usually go fast, through word of mouth.”

At The Winslow, the project under construction at the northeast corner of Winslow Way and Ericksen Avenue, the limited commercial space is mostly spoken for, said Knipe, who is the commercial leasing agent for the project.

But he said office space in the complex is readily available.

Nelson pointed to figures compiled by the Bradley Scott firm for the Kitsap County Consolidated Housing Authority showing that last fall, just over 9 percent of Bainbridge Island’s 233,500 square feet of commercial space was vacant, the lowest vacancy rate in Kitsap County.

But he said that figure has probably increased significantly due to Airbiquity’s relinquishment of a block of space in its office building on Hildebrand Lane.

Other than the Airbiquity space, the largest block of available office space on the island is the office space formerly occupied by the now-defunct Znetix in the Parfitt Building on Parfitt Way. While small firms have leased out a couple of the individual offices – those with top-floor views of Eagle Harbor and outdoor balconies – some 8,000 square feet still remains vacant.

Nelson, the leasing agent for that building, said it is something of a “last-chance” situation.

“All the other buildings around here are full,” he said.

Knipe said the office-market softness is a combination of national and local events.

“The economy has gone south, and that has taken its toll with company growth and expansion, and Znetix has gone south,” he said. That firm, shut down under court order after charges of securities fraud were levelled against founder Kevin Lawrence, was one of the island’s largest commercial tenants.

Knipe said the market continues to suffer from what he calls the “reverse flow” with Seattle.

“We used to see a lot of companies from Seattle coming over here because they didn’t want to pay the high Seattle rent,” he said. “But now, a lot of space on the waterfront or in the Pioneer Square area is available for as low as $12 per square foot, which is half of what the higher-price here goes for.”

Typical lease rates, Nelson said, range from $16 to $26 per square foot, including all expenses.

Knipe said that the demand for island office space is internal – islanders who have outgrown their home office.

“The majority of what we are seeing is demand for 500 to 1,000 square feet, and people want bargains,” he said.

Those buildings that are full, he said, are those where landlords are being flexible, offering short-term leases and small blocks of space.

Nelson agreed that small tenants are dominating the market.

“We’re getting calls from architects, therapists, or small non-profits whose management and ownership are island people,” he said. “I haven’t worked with anyone who isn’t local, which means that Seattle isn’t really much of a factor because local people want the convenience of an island office.”

Although the office-leasing market may be in the doldrums, Knipe said the market for purchasing office or retail property is very active.

“That market has been very lively for the last three years,” he said. “It dovetails with the dip in the stock market and the low interest rates. People are thinking that instead of making a tiny rate of return in the stock market, they can do better by buying property.”

One recent sale, Knipe said, was the two-story building on the south side of Knechtel Way, whose prime tenant is a day-care center. Sale of an office building on Hildebrand is also in the works, he said. Both buyers are local.

“There are more buyers than sellers right now,” he said. “Property to purchase is not easy to find.”

Nelson and Knipe both said the demand for retail space, which they expect to remain strong, should push retail development northward onto Madison Avenue.

“I think properties will be developed along that area,” said Nelson. “There really aren’t any other options.”