Warehouses in Demand as Kingston Plaza sits Unsold

Demand for commercial real estate in Jamaica is shifting toward warehouse and storage space, with the sector offering returns that are outpacing traditional retail developments.

Commercial developments are at times netting single-digit returns while warehouses — largely shell complexes — are offering double-digit returns, according to developer sources.

"The feedback that I got was that we're seeing great demand for some retail spaces and small office spaces. Larger spaces are taking a longer time to sell and rent, but there is a greater demand for warehouses and storage spaces at this time," said Gabrielle Gilpin-Hudson, president of the Realtors Association of Jamaica.

Gilpin-Hudson said feedback from realtors across the island points to a clear split in the commercial property market. The trend reflects the needs of small and mid-size businesses expanding their physical capacity, with demand for warehouse and storage facilities running consistently across regions.

Commercially zoned land is also attracting developer interest, though Gilpin-Hudson cautioned that some owners are pricing their properties beyond what the market can absorb.

"There's a high demand for warehouse storage and fuel service station facilities across Jamaica, as well as for commercially zoned land with a view to doing developments on it. Office and retail type commercial is desired, but we are seeing a disparity between what some persons are asking as their rental prices and what persons are able to afford — that leads to some of these spaces coming on the market and taking some time to be rented," she said.

Not everyone sees retail as the weaker play. Christi Grahame, a realtor associate at Coldwell Banker Jamaica Realty, argued that well-located commercial plazas offer secure and steady income streams that can rival initially attractive alternatives.

"Having multiple shops means different tenants for a more stable cash flow from several businesses. Land values in major commercial areas typically appreciate over time. Commercial real estate can become a generational asset that produces income to build long-term family wealth," Grahame said.

One such property currently seeking a buyer is Pristine Plaza, a four-storey, 32,080 square-foot commercial complex at 15 Eastwood Park Road in Half-Way Tree, steps from the Half-Way Tree Transport Centre. Listed at US$6.65 million — approximately $1.06 billion — on the Coldwell Banker Jamaica Realty website, the property has been on the market for five months.

The building is 92 per cent leased with only two units remaining, and features amenities including an elevator, 24-hour security, a backup generator, underground and surface parking, individual smart water meters, and a rooftop deck. Grahame, who is handling the sale, said finding the right buyer takes time. "An acquisition of this magnitude requires an ideal investor who recognises strategic opportunity," she said.

Gilpin-Hudson suggested that some of the challenges developers face in moving properties stem from a failure to engage realtors early enough in the planning process.

"We think that there is that disconnect because sometimes some developers don't engage the services of our realtor early enough in the process to help them do the planning, the feasibility and looking at the demand in the market before they go to market with their products," she said, adding that insufficient parking is a recurring obstacle for some commercial developments.

On the training front, the Real Estate Training Institute recently launched a partnership with the US-based CCIM Institute to offer commercial real estate designation courses in Jamaica. The first courses are scheduled to begin in July, with additional sessions planned for October. The programme is open not only to realtors but also to attorneys, bankers and property managers involved in commercial transactions. 

Luke.douglas@gleanerjm.com