Drivers of the T&T Commercial Market
Trinidad is known as the business hub of the Caribbean, so it’s only natural that we have an extensive commercial market and a wide variety of commercial offerings, both rentals and sales, as compared to our Caribbean counterparts. But this segment of the market has seen many shifts and movements over the years; from growth and expansion in the 90’s to a construction boom in the mid 2000’s to a depression in the mid 2010’s. This ebb and flow has continued for the past two decades.
The cyclical nature of this segment of the market leads us to question, what are the drivers of T&T’s commercial market?
We round it up in 5 quick points below:
- The Economy – Pegged to the price of oil and gas, T&T’s economy is temperamental at best. The economic climate has a domino effect on the level of commercial activity and thus the movement and migration of businesses within the commercial realm. For instance, with overpopulation and traffic becoming more of a challenge in the capital, we’ve seen many companies consolidate branches, and relocate to areas outside of Port of Spain. While isolated moves by one company may not make much of a difference, en masse they trigger an entire trend within the segment.
- Demand and Supply – Just like any other industry, demand and supply determine the market price of this commodity. Similarly, the demand for A Class and B Class office space in the last decade spurred the construction of new buildings around Port of Spain and more recently, in Chaguanas, Trincity and Arima. This has changed the landscape of the standard and supply of office rentals and consequently, rental and sale prices.
- Government occupancy – All political controversy aside, occupancy of privately owned properties by the public sector and government agencies influence the rental rates and supply of office space across the board. The yardsticks by which we measure commercial standards, rates and codes between private and public sector buildings are usually vastly different. As the migration of some public sector agencies and ministries out of private sector buildings increases, the commercial landscape changes.
- Foreign occupancy – With the influx of global organizations on our shores and in our cities, building owners have had to comply with international building standards and classifications to satisfy our foreign tenants. For instance, hurricane and earthquake codes, safety and sustainability conventions are now a norm in more modern commercial properties. But as standards of buildings increased, so did our rental rates.
- Customer confidence – The intangible factor of fear influences the velocity and development, or lack thereof, of the commercial market. The environmental pressures of foreign exchange, cash supply and liquidity and international investments all trickle down to this market and shape the buying or renting behavior. To this end, all other factors equal, once there’s an inclination of decline or failure, businesses hold; so too does the commercial market.
To find out more about T&T's Commercial Market, ask us about our Commercial Rental Rate Study 2017, an in-depth report on the above trends and more.