COVER STORY: Health Ministry's move a boon for commercial landlords
The National Health Fund's bid to buy the former Oceana Hotel at King Street in downtown Kingston from its landlord, the Urban Development Corporation (UDC), having collapsed and the property having been purchased by another entity, the Ministry of Health is now moving to new offices in at least four new locations.
The move represents a boon for landlords in the business district of New Kingston, who have been sitting on relatively expensive and empty space.
Among the ministry's new landlords are said to be the Paul Chen Young estate, Bevad Limited and First Caribbean International Bank Pension Fund, a source familiar with the move told the Financial Gleaner.
Having vacated about eight floors at 2 to 4 King Street as of the week of December 20, 2014 to make way for the new owners, the ministry has now set up offices at 24-26 Grenada Crescent; 15-16 Grenada Way, the RKA Building; and 45-46 Barbados Avenue, the Masonic Building. It has also occupied 10A Chelsea Avenue, the Bevad Building.
Other sources say that some of the ministry's departments are also now located at the Kingston School of Nursing at Half-Way Tree Road, St Andrew, and the National Public Health Laboratory on Slipe Pen Road in Kingston.
Despite occupying offices at the different locations, total square footage available is said to be about half of what existed at the Oceana Hotel, which was about 90,000 square feet.
The source familiar with the ministry's move said the ministry, having negotiated the purchase of the Oceana Hotel from the UDC, eventually withdrew its offer when it was discovered that retrofitting costs would be double the acquisition cost for the more than 40-year-old building.
The National Health Fund, an agency of the Ministry of Health, offered the UDC $350 million for the building, but retrofitting costs were said in the ballpark of J$600 million, said the source.
The ministry, with its multiple departments, has since been unable to find another building within the price point, the source added.
The ministry is said to have considered the former Claro building on Knutsford, New Kingston, which housed the telecommunications firm before its merger with Digicel Jamaica, but was bypassed because of the limited parking spaces.
The Financial Gleaner tried unsuccessfully to get comments from the ministry. Communications officer in the Ministry of Health, Sharon Jones, promised a response from technical officers, but no response was forthcoming up to press time.
Hotel Sold to consortium
The UDC inked the deal for the sale of the Oceana Hotel to a Canadian-Jamaican consortium in November 2014. It was sold to the Downing Street Group for primary use as a hotel, but the new owners will also be renting space to retail and commercial clients.
The partners in the consortium are Downing Street Partners Realty and Jamaica Property Company Limited, a member of Pan-Jamaican Investment Trust Limited.
Oceana fronts Ocean Boulevard on the Kingston waterfront. The hotel was built in 1977 with 388 rooms. It was modified in 1996 and leased to the Ministry of Health in 1997.
The complex was first placed on the market in 2008. In March 2013, a $350-million deal was approved by Cabinet for sale of the hotel to the National Health Fund, but the transaction failed to close, with no explanation on why the deal was cancelled.