One-quarter million square feet of BPO-outsourcing space hits market

More than 245,000 square feet of office space sits vacant, reflecting higher-than-usual inventory amid a downturn in the outsourcing sector.

The vacant offices span Half-Way Tree Road, Mona Road, Grenada Way and Saxthorpe Avenue in Kingston, along with Fairfield Road and Market Street in Montego Bay.

Jamaica Sotheby’s International Realty co-founder and CEO Julian Dixon said the volume of large-format space currently available runs slightly above normal levels.

“While not abundant, this inventory is higher than usual for such large spaces, signalling increased availability,” she said.

She noted that medium-size spaces fall in the 10,000- to 25,000-square foot range, while large multi-storey spaces exceed that amount.

Among the largest office blocks currently being marketed in Kingston are:

• 76 Half-Way Tree Road, Kingston 10 – about 30,000 square feet across three floors, with additional space reportedly available within the building. The property was developed during the growth years of the outsourcing industry and has been publicly associated with the StarTek operation.

• 20 Mona Road, Kingston 6 – 36,250 square feet.

• 10-16 Grenada Way, Kingston 5 – 34,258 square feet.

• 7 Saxthorpe Avenue, Kingston 8 – 31,611 square feet, a property previously configured as a call centre.

Together, those properties account for more than 132,000 square feet of large-format office inventory in the Corporate Area.

In St James, another 113,000 square feet of large-format office and BPO-oriented accommodation in Montego Bay includes:

• Barnett Tech Park, Mega Byte Drive, Fairfield Road – 25,400 square feet.

• Catherine Hall A&B, off Howard Cooke Boulevard – 27,000 square feet.

• 13 Crane Boulevard, Fairview – 18,700 square feet.

• 30-34 Market Street, Montego Bay – 42,000 square feet.

“It comes down to dollars and cents,” Dixon said. “Other countries are competing for BPO.”

She said the contraction of the sector between 2024 and 2026 reduced demand for the large, open-floorplate offices that were specifically designed to accommodate outsourcing operators.

“The BPO sector has shrunk between 2024 and 2026, reducing their demand for large office spaces,” she said.

She added that such properties are taking longer to lease than smaller commercial units.

Despite the inventory build-up, brokers are not describing the market as being distressed.

According to Dixon, 74 per cent of large commercial spaces are actively being marketed, while 26 per cent are already under negotiation or nearing lease agreements.

Industry growth

The industry started in the 1980s with garment outsourcing, especially in the Montego Bay Free Zone. Two decades ago, a second wave emerged providing call-centre services, heavily based in Portmore, St Catherine – facilitated by private investment and state-backed developments such as Portmore Informatics Park.

Through special economic zones, investment incentives and industry-development initiatives – promoted by agencies including JAMPRO – policymakers courted BPO operators and encouraged expansion to Montego Bay, Kingston and beyond, increasing the stock of commercial space available to the sector. At one stage, government investment materials projected the creation of thousands of additional BPO jobs and highlighted plans to develop more than one million square feet of commercial space to support the industry’s growth.

That strategy helped transform outsourcing into one of Jamaica’s largest employers. Last month, however, Global Services Association of Jamaica President Yoni Epstein told the Financial Gleaner that employment in the sector had fallen to about 40,000 workers from roughly 60,000 at its peak. Epstein said the decline was driven by lower productivity, labour shortages, Hurricane Melissa, and increased competition from rival outsourcing destinations – not artificial intelligence.

Nor has a collapse in rents materialised

Dixon said rental rates for well-located commercial properties have generally remained firm, with some assets even experiencing slight upward pressure.

The bigger shift appears to be in who is taking space.

While demand from outsourcing operators has softened, warehousing, logistics and industrial users are expanding. Small and medium-size enterprises are also increasingly seeking operational and storage space.

“Warehousing, logistics, and some retail sectors are increasingly leasing commercial properties, filling some of the gaps left by BPOs,” Dixon said.

She cautioned against interpreting the increase in inventory as a sign of broader weakness in commercial real estate.

“It’s not hurting commercial at all,” she said.

Warehousing, logistics and other commercial segments continue to perform strongly, she said. The challenge is not whether the buildings will be occupied, but who will occupy them.

“What will now occupy those spaces? We all need somewhere to operate from. It is always about pivoting. It is just to see what the pivot will look like,” Dixon said.

Even as inventory rises, developers continue to bring new office projects to market.

One example is a 34,889-square-foot office/BPO development at 4 Carvalho Drive near Hope Road, which is currently being pre-leased while under construction.

The project targets corporate occupiers, professional-services firms and outsourcing operators, suggesting that some investors continue to see long-term demand for large-format office accommodation, despite the adjustment taking place in the outsourcing sector.

carolyn.guniss@rjrgleaner.com