Exodus from City offices
WITH AT LEAST $200 million invested in the construction of commercial office space over the past five years, it is likely that owners of older, more unkempt properties will have to lower their rent in order to attract tenants.
This is according to Terry Hanton, managing director of Property Consulting Services Inc. which is a division of Altman Real Estate.
He told BARBADOS BUSINESS AUTHORITY that the development of modern well-outfitted offices had resulted in the exodus of a number of operations, particularly Government offices, out of The City.
“There is quite a lot of vacancy in Bridgetown which has not yet been filled and I think there has been a trend towards movement into higher quality office space, leaving more vacancies in B- and C-class building but none really in A-class buildings,” he said.
Describing the commercial market as “solid for well-maintained and well-positioned buildings, Hanton said there was a movement away from some of the more heavily trafficked areas into “areas which have easier road access and the transit time to and from the buildings is shorter”.
The property consultant predicted that there would be some pressure on landlords to charge less for older buildings.
Generally speaking, he said rental rates had declined over the “last couple of years”.
“Certainly in the last six to nine months there has been an indication that landlords will be trying to reduce rates in order to attract new tenants,” he said, noting that reductions were in the region of ten per cent.
While Hanton suggested that those with older buildings would have to pay greater attention to upgrading their properties, he noted that “it’s not easy to borrow money for renovation”.
In Terra Caribbean’s 2011 investor guide The Red Book, brokerage director Hayden Hutton noted that Barbados’ office market was a relatively small one characterized by a modest A-class segment and significantly larger B and C-class segments.
He noted that the A-class market had proven to be a resilient one, with a natural vacancy rate of three to five per cent.
“Traditionally supply has tracked demand, with very little speculative construction and most buildings fully subscribed at completion,” he said.
Hutton noted, however, that the British American building in Collymore Rock was somewhat of an anomaly, since the completion of the building and the willingness of tenants had been affected when it was placed under judicial management. (NB)