With the financial world in distress and the fallout for Bermuda unpredictable, people are naturally cautious about the future of commercial real estate.  Currently general demand is steady but not over whelming.  While there continues to be some inquiries from overseas companies, local international service companies are also a demand factor at this time. 

The most robust demand is for smaller spaces (approx 500-3,500 sq. ft.) with a handful of larger prospective tenants looking for spaces greater then 5,000 sq. ft.  We are seeing some internally generated demand where insurance companies are looking to shrink downsize into smaller spaces and others, mostly in the same industries.  Despite all the doom and gloom our market intelligence indicates that there still appears to be good demand for Hamilton, especially central Front Street, harbour view space, provided the space has good natural light, is available on long leases, competitively priced and the floor space in the 3,500 - 5,000sq. ft. range and they are close to parking lots and amenities like gyms, restaurants shops etc.

             We feel that Landlords with space on the market over the next year or so may have to accept rents similar to those achieved a year or two ago as the market has flattened out. They will also have to remain patient for the short term due to lower demand levels and a low propensity for tenants to fork out large sums of money for extravagant leasehold improvements at this time.  This should create slightly higher vacancy rate than we have  become used to especially in  lower quality buildings as some tenants look to newer more sophisticated, buildings that are more energy efficient have more natural light, views, generators, gyms, showers etc. The upside is that with substantial office developments coming on line  in the next 2 3 years, Bermuda is well positioned to capitalize on new and existing company growth as the worldwide economy starts steady growth again through 2009 and beyond.

            Six-year term work permits have been headliners for some time; however, in recent months we have happily seen the government more flexible on these policies which adds a some comfort to the international business community and their suppliers at a much needed time. Through this challenging time it is our view that it will be vitally important for Bermuda to enhance, through creative international marketing strategies andsensible domestic policies its reputation as a place where mainstream international companies feel completely comfortable doing business.  What does all of this mean? We have seen an increase in existing office space coming on line in the next 2 - 3 years; Bermuda is well positioned to capitalize on new and existing company growth as the worldwide economy slowly recovers over the next several years.  Any slowing in demand will be short term and with the mechanism we see in the financing side of our market, the expectation is Landlord returns in commercial real estate will remain relatively strong in an otherwise more volatile investment environment. Coldwell Banker Commercial has been successful over the years in managing changing demand patterns for Landlords.