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Realtor: 2% Office Vacancy Increase 'Not Encouraging'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Vacancy rates for ‘Class B’ office space on New Providence have increased by 2 per cent since 2011, a leading realtor yesterday saying: “It’s not an encouraging outlook.”

David Morley, Morley Realty’s president, told Tribune Business that while there was “no major player” currently seeking to lease commercial office space, the market was nevertheless starting to show some revival signs.

He added, though, that while 2013 looked like “a gargantuan year” in terms of new commercial leases, this was largely because 2011 and 2012 had been devoid of any activity in this niche.

Mr Morley, whose firm is one of the leading commercial property managers and agents in the Bahamas, told Tribune Business: “I was just doing a report for a client of mine, comparing vacancy rates for different properties and areas over the last couple of years.

“For Class B properties, vacancy rates have increased by another 2 per cent between 2011 and 2013. It’s not showing an encouraging outlook.”

Mr Morley explained that so-called ‘Class B’ office space and commercial buildings were those which, constructed in the 1960s and 1970s, had to be subsequently modernised and renovated to put in facilities such as fibre optic cables.

He cited Norfolk House and Shirley House as examples of ‘Class B’ properties, whereas those deemed ‘Class A’ were the likes of new, modern buildings fitted out to be energy efficient and with high ceilings.

Mr Morley said his ‘Class B’ survey included the majority of such office space in downtown Nassau and elsewhere in New Providence.

The increased vacancy rates, despite the world and Bahamian economy moving further away from the September 2008 ‘crash’, provide further evidence of what the International Monetary Fund (IMF) has branded as a”painfully slow” recovery in this nation.

It shows the amount of available commercial office space in New Providence is expanding, not decreasing, indicating there are fewer businesses about.

Agreeing that the commercial office space market was “fairly soft”, Mr Morley told Tribune Business: “There was nothing going on in 2011 and 2012. It was pretty dismal.

“2013 looks like a gargantuan year. I can tell you that the volume of leasing tenants in 2013 was significantly higher than in 2011 and 2012 combined.

“We ended up leasing space in 2013 when in the two prior years there were not any new tenants,” he added.

“Are things on the improvement? I’d like to believe so, but I’d like to remain realistic rather than optimistic. Hopefully, it’s [2013] the start of a trend, let’s put it that way.”

Mr Morley further told Tribune Business: “I know we’ve been successful in 2013 in leasing the small spaces at the Bahamas Financial Centre, so their vacancies have come down slightly, and we;re in discussions with a couple of other small potential tenants for other space.

“What we’re seeing is most business is small business; there’s no major player in the market right now.”

When it came to commercial office space rates, the Morley Realty president added: “They’re still fairly flat.

“Our experience is that landlords are giving more concessions to attracting business,, in terms of giving buyers rent-free business.

“If you looked on paper the rental rate may be the same as five years ago, but the tenant may only be paying for 11 months instead of 12 months, so the net rental rate is lower.”

Mr Morley said that in discussions with Bahamas Realty, one of its main competitors on commercial office space leasing and management, it seemed like his company had “dealt with more tenants”, while its rival had “dealt with more square footage”.

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