A recently published study by local chartered surveyors and property consultants, Charterland, shows that it pays for businesses to shop around in the Cayman Islands when looking for commercial property to lease, with wide disparities revealed between the cost of leases of various commercial properties in and around the George Town and Seven Mile Beach corridor. The Cayman Property Review 2010 study looked at all commercial lease transactions that took place in 2010 and found that the quality of a building’s infrastructure did not seem to matter when it came to the price of the lease.
Citrus Grove is considered one of the most prestigious buildings competing for premier office users, designed to be one of the most hurricane-resistant buildings in Cayman and is described by Charterland as a Class A building (as classified by the Building Owners and Managers Association based in the United States). Yet its rents were not the most expensive, with a new lease agreed upon in 2010 by DRC (Cayman) Ltd renting from landlord UBW Ltd at CI$35.44 per square foot for a term of three years.
Although this rent is markedly higher than the 2004 rent agreed between another Citrus Grove tenant, the Cayman Islands Government, which paid CI$33.18 per square foot, it is a good deal less than Cable and Wireless’ recent variation to its lease with Anderson Square Development Co. They pay CI$40.19 per square foot for their 4,000 square foot rental and have done so since the lease was originally registered in June 2005. Anderson Square is termed a Class B building, which means it falls into the “fair to good “ category for finishes for the area and systems are adequate.
Another Class B property charging one of the highest rents to its tenant was DMS House, which saw a variation in the licence between landlord Commercial Properties Limited and The Governor of the Cayman Islands with regard to an original lease of December 2004. The original lease equated to CI$42.34 per square foot and the variation which took place in 2010 saw no change to this price.
On the other hand, Class A building Cayman Corporate Centre agreed two leases with the Cayman Islands Government as its tenant last year – a two year lease for CI$30.19 per square foot and another for CI$28.84 per square foot, which perhaps indicates that Government did its homework and shopped around for a good deal in this case.
The report also highlights that it might be worthwhile shopping around among various sites within a property and considering where possible sub-letting from existing tenants.
Class A property Camana Bay’s head-lessee Ernst & Young sub-let 4,800 square feet of office space to sub-lessee Caribbean Publishing Co (Cayman) Ltd in March 2010 for seven years for CI$33.81 per square feet. It also sub-let 2,361 square feet to Willis Management (Cayman) Ltd for a similar term for CI$34.71 per square feet. A transfer of an existing Camana Bay lease from Garmin Ltd to KOCH Nitrogen International SARL last year highlighted that the transferee was paying CI$41.01 per square feet for its five year lease of 824 square feet.
In the study commercial properties that rent to retail outlets are not classified into different categories and Charterland only looked at retail leases in the Seven Mile Beach area. Costs of leases in this area varied wildly.
Blackbeards Trading Company Ltd has the rawest deal among retail lease transactions last year, paying CI$83.67 per square foot on the 800 square feet it rented for a term of five years from landlord KDC Holdings Co Ltd in its Cayman Falls location. Regency Court is another high-priced property for retail, charging from CI$41.08 to CI$54.76 on leases registered in 2010.
Savvy retail outlets at The Marquee and Marquee Plaza area negotiated leases in 2010 from just CI$14.03 to CI$33.23 per square foot. Camana Bay tenants in the retail business also got a fair deal, paying from CI$12.06 to CI$27.43 per square foot for their leases agreed last year.
Stewart Connelly from Charterland Ltd states that the data and commentary in their report is for general information purposes only and that qualified chartered valuation surveyors are best hired to establish market rent of any property. He also states that the terms of the lease need to be studied as they will impact market rent prices as well.