companies could prove hard to find, according to some realtors on the Island.

A boom in the international business sector over the last few years has led to most of Hamilton's premier commecial rental space being snapped up.

Commercial realtors say there is plenty of lower grade office space around, but many of the buildings are too old and run down to fit in with the blue-chip image of many of Hamilton's new trust and insurance companies.

"All the very prime space is pretty much spoken for,'' said Mr. J.J. (Jack) Outerbridge, chief executive officer of LP Gutteridge.

"Most of these companies are not satisfied with anything less than a prestigious location and building which fits in with their image. They are quite prepared to pay for it.'' The most sought after office space in Hamilton currently rents for up to $45 per square foot per annum, including maintenance fees.

That works out at $270,000 per annum for a 6,000 square foot site, which is considered to be a reasonable size from which to start amount a newly-formed company.

Mid Ocean Reinsurance Company, which formed at the end of last year, has just moved into a 6,000 square foot space on the mezzanine level of Richmond House after several months in temporary, smaller offices at Craig Appin House.

A spokesman for Mid Ocean Re said: "I think we probably got the last Grade A space available. I don't know where the next company that comes along will find decent space.

"We had a good look around Hamilton before finding something that was right.

"While we were at Craig Appin, a couple of companies contacted us to see if we would sub-let the space to them once we moved. That's still being negotiated as far as I know.'' Dorchester Realty manages some of the city's most prestigious office space, such as Cumberland House, Craig Appin House, Chevron House and Dorchester House.

The firm's managing director, Mr. Duncan McBeath, said: "All these new insurance entities and trust companies are concerned about their image.

"They want top shelf space like that offered at Cumberland House, but there is a shortage of capacity in this quality range. The older buildings simply will not do for them.'' New international companies with an operational base in Bermuda typically start off with office space of about 2,000 square feet, he said. That is the size which Mid Ocean Re had at Craig Appin House.

But hugely successful businesses, such as XL and ACE, can require ten times that size once they are established, he said.

Realtors said more office area will be created once the Bank of Bermuda moves into its site in Gorham Road and vacates several premises around the capital.

Neither Mr. Outerbridge nor Mr. Arthur Jones, of Jones Waddington, believed that more firms would follow Transworld Oil and move out of Hamilton.

Mr. Jones said planners had long ago decided that Hamilton is to be Bermuda's financial centre and said they would not allow companies to move wholesale to other areas.

"A departure away from Hamilton on a large scale would lead to the decline of the city,'' he said. "If there was too much diversification or distribution on the Island you would start to undermine the economic base of Hamilton as a commercial centre.'' This would have a negative impact on industries like the restaurant, entertainment and retail industries, which rely to a large extent on the people generated by international businesses, he said.

Mr. Outerbridge added: "Most of the companies want to be in the city near the banks, lawyers and accountants. They don't want to be isolated.'' Despite the shortage of top quality space, he did not forecast a flurry of new buildings to accommodate the new reinsurance companies which are in the process of setting up in Bermuda.

"It's too early in the day to say we need new buildings,'' he said. "I know there are a lot of drawings in architects' offices for new office space when the demand requires it but I don't think we're there yet.'' Realtors said the owners of lower grade office will either have to spruce up their properties or demolish them and rebuild.

"Improvements will have to be made to older buildings in order to attract some of these new companies,'' said Mr. McBeath.

Mr. Jones speculated there will be a period of demolition and rebuilding in Hamilton, similar to what the Bank of Butterfield is doing on Front Street.

SPACE-MAKER -- Completion of the Bank of Bermuda's Bermudiana Road building, shown here in an artist's impression, is expected to free up office space around Hamilton.

DESIRABLE -- Cumberland House is a popular location for Hamilton offices.