As of mid-2014, there were four class A office buildings under construction in Port of Spain, with a total of 250,000 sq feet of usable space, according to Terra Caribbean, a leading real estate agency. At the time, Terra Caribbean argued that this was a positive development, given a shortage of high-quality office space in the city. The shortage was the result of the government’s slowness to make use of all space available at its Waterfront complex.
As a result of this lack of supply, numerous government ministries and agencies have been occupying low-rise class B and class C office space in and around Port of Spain that would otherwise be available for private sector entities.
As of early 2015, this was easily visible to even a casual observer walking the streets of the city. The government’s development of the Waterfront Centre and the economic downturn following the global financial crisis curtailed the construction of new projects. Other than the four buildings identified by Terra Caribbean, most major commercial office blocks were constructed prior to 2007.
New Options
In May 2015 Terra Caribbean’s website listed that space at the brand new Savannah East building in Port of Spain could be rented for $2.77 per sq foot. Savannah East is a 78,000-sq-foot, seven-storey block. Expected to open in June 2015, it is the only Leadership in Energy and Environmental Design-certified building in T&T. Its features include 160 parking spaces, a rooftop lounge and smartcard access. The building also has ample water storage, a back-up generator and CCTV with live coverage.
Class B and class C office space typically rented for around TT$16 ($2.46) per sq foot in mid-2014. However, rentals for class B and class C space may well come under downward pressure, as in early March 2015 Massy Realty, another leading real estate firm, listed nearly 90 commercial properties, mainly in and around Port of Spain. Most were in smaller, low-rise buildings, typically with subdivisions of between 1000 and 4000 sq feet of office space. The majority of the properties could be rented for TT$10 ($1.54) per sq foot or less.
Another possible option for companies that are looking for cheaper space, particularly financial institutions that wish to establish service centres for their core middle- or back-office processes, is warehouse conversions. As of early May 2015, Terra Caribbean listed 15 warehouses for rent, mostly for between TT$3.50 ($0.54) and TT$5.50 ($0.85) per sq foot. Collectively, these properties offered a total of 280,000 sq feet of space.
The majority of the warehouses on the market are in towns to the east of Port of Spain, near the airport, or to the south, near the main highway to Chaguanas. Converted into offices, the warehouses would also have the advantage of being close to where most workers live.
Tackling High Prices
Homes prices and rents in the island nation have remained high, despite the after-effects of the economic crisis of a few years ago – no doubt driven by high demand. The government also announced in late 2014, that it was committed to addressing the housing shortage and increasing support for families in need.
The Central Bank of T&T’s “Financial Stability Report 2014” also noted that it was looking to implement macro-prudential policies to address concerns regarding prices in the real estate sector, particularly the loan-to-value ratio, rather than simply turning to monetary or fiscal policies.
With home prices rising faster than average earning for 1991-2006 and again between 2010 and 2013, it is clear that affordability has also deteriorated, despite a brief improvement over the 2006-09 period. Given how important home ownership is in the country, the central bank underlined the importance of supporting the mortgage market for the sector, with mortgage lending representing more than 40% of the domestic banking system in 2014.
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