Growth seen in commercial property sector
The struggling commercial real estate sector is bouncing back, according to the latest figures.
Real estate firm Coldwell Banker said it had rented or placed in contract nearly 80,000 square feet of office space this year — most of it in the City of Hamilton.
And the firm said: “Several properties for sale have closed recently with others poised to go into contract.
“Interest in the remaining inventory is very encouraging as it demonstrates a revival of long-term confidence.”
The firm’s figures also showed that interest in larger offices was growing, against the trend in recent years of interest in smaller spaces.
The 2014 figure compares to an annual rate of absorption of around 75,000 sq ft to 125,000 sq ft a year, with peaks in boom times of 125,000-175,000 sq ft a year.
But the firm added that more than 600,00 square feet of office space in Hamilton alone remained vacant.
Coldwell Banker’s Graham Smith said: “We are excited about the growth of new companies on the Island and the expansion of existing companies in recent months.”
President and CEO Brian Madeiros added that empty office space was “an invisible issue” for most people working in the city.
He said: “If actual vacancy rates were posted on each commercial building in Hamilton, our city users may have more transparency around this economic indicator and perhaps would more readily understand the need to aggressively explore further policy changes as it relates to growing our Island and city population.
“The economic ripple effect associated with a growing city population is significant to the private sector who are trying to sustain business models which require greater transactional volume and increased consumer confidence.”
And he added that the decision to award the America’s Cup to Bermuda would be a major factor in revitalising the economy.
Mr Madeiros said: “Much of the current office inventory is dated and requires refurbishment.
“If only half of the vacant accommodation was refurbished and fitted out for new tenants at current building and fit-out rates, this would result in an economic injection in excess of $40 million.
“Occupants in this newly fitted out space could spend well over $300,000 a week on lunches alone.”
The firm added that the recent growth in Bermuda’s business community was “much more transient in nature than it has been in the past decade”.
But it said that the demand for quality office space for a small number of executives who stay in Bermuda for only short periods of time, as well as residential demand for city living, could be expected to grow.
Mr Madeiros added: “Commercial absorption rates are not likely to climb as quickly as they are required to do in order to more aggressively reduce the current vacancy rate under current conditions.
“Therefore, the invisible office inventory issue which impacts property owners, business owners and city users will continue to exist unless further creative solutions can be identified.”
And he said that further effort needed to be made “to attract new global business enterprises to Bermuda” and “create economic expansion and new job opportunities”.
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