Jim Hebert, president of Hebert Research, a Bellevue, Wash –based firm, said his company recently completed a study that supports the commonly held philosophy that a slowdown is here for quite some time. The Hebert study found that only 13% of local executives expected to expand their facilities during the next 12 months, compared to 23% one year ago.

"The other interesting fact was the number of companies that have entirely postponed the idea of expanding," Hebert said. "It is really affecting the market, especially new construction."

Hebert pointed to a new project in Bellevue that has virtually stopped construction after a deep excavation for an underground garage. "In the past few years, work would have progressed as quickly as possible, "Hebert said. "Now, the building has not received the prelease commitments it expected so things have come to a halt."

The Grubb & Ellis first-quarter vacancy report showed that like the earthquake and the Boeing decision, the local office market, which breezed through 2000 with record low vacancy rates, has now become another source of anxiety. The company's research indicates that demand has dropped off sharply while supply - in the form of dot-com space give-backs and new speculative construction begun last year - continues to increase.

"I really thought our vacancy rate would be higher than the 4.3% we reported," said Ethan Bacon, research analyst for Grubb & Ellis. "You hear on the street that the vacancy rate is healthy number, that we're not going in the tank. . . However, when you consider those other indicators, there are a lot of factors out there that will be difficult to turn around in a short period of time."

Conway Pederson Economics, a local firm that has followed and analyzed Seattle-area trends for decades, projects regional job growth - a key driver of the office market – to come in at 1.2% for 2001, down from 2.2% last year. In addition, Seattle's low unemployment rate appears to be on the rise, topping 4%for the first time since 1997, according to the Grubb & Ellis research team.