The Bank of Bermuda plans to consolidate operations by moving its 1,160 employees from seven offices into three ? a development that could flood an already rapidly expanding commercial property market.

The bank?s consolidation plan is tied to its redevelopment of the Front Street site of former department store Trimingham Brothers Ltd. Construction of a new office tower is expected to take in the region of three years to complete, and is pending planning approval.

Under the plan, the bank will vacate five of the office buildings it currently occupies ? equal to 213,000 square feet ? and put them up for sale or lease.

Erna DeGraff, a Rego Realtors agent who specialises in commercial real estate, said the bank?s plans to vacate five of its existing properties ? most of which would be considered prime real estate ? would likely put pressure on the secondary market.

?With the influx of space, secondary market rates could be affected,? she said, with tenants having greater leverage to demand more amenities and lower rates from landlords if there is an overabundance of space.

The bank plans to keep its Albuoy?s Point office and its Church Street branch open. But the move to the new Trimingham?s site will see several large buildings go empty, including the former L.P. Gutteridge building, the bank?s Par-la-Ville branch and Compass Point. All three properties are located along Bermudiana Road, an area that has become a magnet for businesses since XL Capital and ACE Limited built their headquarters in the area.

Graham Smith, a Coldwell Banker realtor that specialises in commercial real estate, said at present office space is tight but the bank space, as well as several projects either underway or about to break ground, will add significantly to available space. ?We are seeing unprecedented commercial office development,? he said, listing off 12 developments already in the works, and with more plans pending. ?It?s going to keep me busy.?

The space to be made available by the bank?s consolidation is large enough to hold up to 1,700 workers, based on industry standards of allotting 1,000 square feet for every six to eight staff.

In total, commercial space due to be added to the market over the next few years could go as high as 700,000 square feet. This is based on an August real estate report from Coldwell Banker JW Bermuda Realty which cited existing plans for between 350,000 and 500,000 square feet in additional commercial real estate under development.

Mr. Smith told he was optimistic he could find occupants for the unprecedented influx of commercial real estate, but said developments would keep him busy. Some of the buildings under construction already have tenants signed up to move in, but many will leave behind empty space in buildings they currently occupy.

Some of the space could be snapped up by new reinsurance companies.

This sector is expected to see some growth based on expectations the property-catastrophe market is going to see higher rates because of Hurricane Katrina.

Mr. Smith said he is currently trying to source small office space for two new reinsurance start-ups who are moving into the Bermuda market.

Katrina, the August 29 storm that hit the Gulf Coast region, is expected to be the most costly disaster ever, costing the insurance industry up to $60 billion.

Mr. Smith said that growth in insurance companies would have a knock-on effect, leading to growth opportunities for companies that service the sector, from law firms to air conditioning companies.

Commercial real estate rates have risen 30 percent since 2000, increasing from an average of $50 a square foot to $65 a square foot in 2004.