Puerto Rico still Caribbean’s leading shopping destination
With 15 million square feet of shopping center space, over 20 of U.S. and world-renowned retail brands and top shopping center operators, Puerto Rico remains the shopping Mecca of the Caribbean, according to leading experts participating in this year’s 2013 ICSC Caribbean Conference, organized by the International Council of Shopping Centers (ICSC).
Showing moderate attendance compared to previous years, the two-day conference at the Puerto Rico Convention Center includes the participation of the industry’s top shopping center companies including DDR Corp.; Vornado Realty Trust; Venezuela’s Constructora Sambil; Kimco Realty Corporation and Puerto Rico’s own Empresas Fonalledas and Empresas Caparra.
For Puerto Rico’s newly elected governor, Alejandro García-Padilla, the island’s resilient shopping center industry is simply fertile ground as he aims to deliver on his pledge to create 50,000 new jobs during the first 18 months of his administration.
“Job creation is a strategic priority of this administration. It will be a diversified effort, where every new job from every economic sector counts. We can’t afford to rely on a single economic sector to drive future economic growth,” said Alberto Bacó, new Puerto Rico Secretary of Economic Development and Commerce, adding he projects that 20 percent of new jobs will come from existing companies that have pledged to expand local operations focusing on such strategic areas as energy; renewal of public and private infrastructure; increase food exports as well as local food production; intensify Puerto Rico promotions and increase overall exports.
Bacó went on to say that 10 local companies have already pledged to actively support the new Jobs Now Act helping to add much needed new jobs. However, the García-Padilla administration has yet to secure the commitment from top local shopping center companies and major retail store chains, which represent an important component of the local economy to the tune of $35 billion.
“We are in the midst of conversations with top shopping centers and retailers to secure their job creation pledge,” assured the Economic Development Secretary-designate who preferred not to confirm any names citing conversations as “still preliminary.”
P.R. consistently outperforms U.S.
Although performance of top U.S. retailers on the island consistently outperforms their stateside counterparts, oftentimes 3-to-1 in sales per square foot, there hasn’t been a major shopping center development in more than 13 years.
Something William Taubman, chief operating officer of Taubman Centers, said “will soon change,” referring to the company’s already under construction 600,000-square-feet Mall of San Juan adjacent the Teodoro Moscoso Bridge, a short a seven-minute ride from Luis Muñoz Marín International Airport and within driving distance from the island’s top residential and business districts.
Slated to open late 2014, leading department store chains Nordstrom and Saks Fifth Avenue will anchor Mall of San Juan, which Taubman vowed will be the island’s dominant upscale shopping destination catering to a mixed clientele of which 50 percent will be new visitors or tourists, helping deliver true upscale shopping tourism in Puerto Rico.
The Taubman executive added that nearly 60 percent of Mall of San Juan’s retail mix would be completely new to the island. Contrary to other top malls in the area, there will be entertainment in the mall but not with the kind of “E” focus other large malls in Puerto Rico offer, “it will be a place like no other in Puerto Rico, a place of gathering, the experience itself will be a major component of the entertainment.”
Mall of San Juan will leverage the latest eco-friendly technology as part of the design and construction making it “an eco-friendly, modern structure from its single UV (ultraviolet) glass ceiling panels to programmed electricity controls and state-of-the-art water use systems for bathrooms and cooling.”
Meanwhile, Francisco Chévere, new executive director of the Puerto Rico Trade Company, the government entity that gathers the island’s retail and commerce statistics, grabbed conference participants’ attention when talking about new government incentives to spur job creation in the near future.
“It is a true commitment from the García-Padilla administration to facilitate the creation of much-needed 50,000 new jobs if Puerto Rico is jumpstart it’s economic growth, the retail and shopping center industries have helped keep economic activity going during the most difficult times of our recent economic history, new incentives will truly support many small and midlife entrepreneurs seeking to join the shopping center industry,” he said.
3 types of incentives
In general terms, new economic development incentives will apply to three types of businesses including a) new businesses (not renamed businesses or spin offs from other ventures); b) businesses in expansion mode of which 25 percent of its total employment come from new hires and will invest 25 percent of total capital required for said expansion and c) development businesses, those with 150 or fewer jobs who will benefit from a idle inventory of vacant government properties that will be made available for lease for as little as $1 a year.
PR Trade expects to release a full schedule of upcoming trade missions within to such target market-regions as Asia and Latin America, “these too offer a great opportunity for local retailers to insert themselves in the global commerce scene,” concluded Chévere.
While Puerto Rico’s relationship may give it an important competitive advantage to other shopping destinations in the Caribbean, there is growing competition coming from some of the region’s emerging tourism destinations.
St. Martin, one of the smallest Caribbean islands has more than doubled the number of cruise ship arrivals and home port activity helping spur new shopping center development, explained Luis Emilio Velutini of Venezuela’s Fondo de Valores Inmobiliarios, referring to the company’s thriving shopping centers in that neighboring Caribbean island.
“Definitely, our shopping center industry is directly tied to our growing tourism industry,” added Dona Regis, marketing and research director for Saint Lucia Air and Sea Ports Authority. “While we have a growing number of retail activity, we are still lacking top retail name brands, that represents a major growth opportunity for us.”
Rapid growth posted by some Caribbean islands is consistent with a wider global trend in which large economies are slowing down while new growth is coming from smaller emerging economies, explained Economist Daniela Blanca’s de Erice.
“While global financial crisis adversely affected Caribbean economies, there are signs of economic recovery. While modest, growth in the region will continue to be directly linked to new tourism activity,” she concluded.