There’s an old saying suggesting the more things change, the more they stay the same.
That seemingly contradictory idea could be applied to Grand Cayman’s commercial real estate market, which seemed to undergo a fundamental change during the COVID-19 pandemic, when a good portion of office employees worked from home.
Just as it did in many other parts of the world, it appeared as if working from an office in Cayman would become the exception and not the norm. However, two years later, commercial real estate is in great demand again, despite transformations in workplace environments.
A report released earlier this year based on research and surveys conducted by Knight Frank | Cresa found that real estate was playing a critical role in supporting business transformation.
“We are far beyond the days when corporate real estate was viewed dismissively as a factor of production or a necessary evil,” the report states. “The pandemic generated a new and necessary debate about what and how much real estate businesses need. But it is a debate about how best to leverage real estate to support broader strategic goals rather than whether it is required. Ultimately, it is a debate about purpose.”
In particular, commercial real estate is viewed as critical to the attraction and retention of staff and the increased collaboration of that talent.
“The role of real estate in successfully fighting the war for talent is well-rehearsed and has fuelled a flight to quality in global real estate markets,” the report states. “This trend will continue, with almost 200 [survey] respondents expecting an increase in the quality of the space occupied across their portfolios over the next three years.”
Against the backdrop of staff members working individually and remotely during the pandemic, commercial real estate is now seen as increasingly important in bringing people together to collaborate, co-create and brainstorm.
“There has been a groundswell of technology solutions to enable digital collaboration, and these will undoubtedly have their place in our working futures,” the report states. “But, for many companies, in-person collaboration is an integral part of this future and a critical use case for the office.”
Other factors cited in the report that align corporate real estate with talent attraction and retention include “corporate brand and image” and “employee well-being.”
“The in-person interaction of employees is increasingly recognised as an essential component of their psychological well-being, something that has been negatively impacted by the isolationist remote working of the pandemic period,” the report stated.
Camana Bay
The Knight Frank | Cresa report findings correspond to the increased demand Camana Bay is seeing for Class A office space, which is considered the highest form of office space because of its higher standard of construction, prime location, professional management, excellent security and modern technology.
Since Camana Bay opened in 2007, six Class A office buildings with a total of 666,000 square feet of office space have been completed, including 60 Nexus Way, the 10-storey mixed-use building that opened in April of this year. As of 2022, before 60 Nexus Way opened, 99% of Camana Bay’s 474,000 square feet of available office space were leased, with only 7,000 square feet remaining.
The opening of 60 Nexus Way in April of this year added another 192,000 square feet to the available inventory and much of that has already been leased.
Camana Bay has already leased more square footage of Class A office space this year through July than it had in any one year in Camana Bay’s history.
Some of the increased demand is coming from current tenants expanding, but it is also coming from new tenants as well.
Driving factors
The enactment of the 2019 Private Fund Act is seen as a major factor for much of the office expansion of current Camana Bay office tenants.
According to data from the Cayman Islands Monetary Authority, the number of registered funds in the Cayman Islands has grown to 29,092 as of the first quarter of 2023, a 168% increase since the enactment of the Private Fund Act. The increase in the number of funds has created more business for fund administrators, fund governance providers, audit firms and law firms, which make up the majority of Camana Bay’s Class A office tenants.
Another factor in increasing demand for office space is the global regulatory requirement for companies to have a physical presence in jurisdictions that offer tax benefits.
This article was published in the September/October 2023 print edition of Camana Bay Times.
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