The Puerto Rico Commercial Real Estate Market

Puerto Rico represents a thriving, tropical paradise of commercial real estate activity for prospective investors and tenants. With plentiful development assets available and millions reserved in federal funding for economic stimulus, Puerto Rico is poised for accelerated growth and represents potentially favorable investment opportunities. Thanks to Crexi, searching for Puerto Rico investment property has never been easier.

Puerto Rico agents use Crexi to quickly list and market their properties, manage leads, and close deals. With Crexi, brokers can immediately connect with viable buyers and tenants who indicate interest in the market.

To date, Crexi has facilitated more than $610 billion in CRE transactions and marketed over $7 trillion in property value.Crexi proudly serves San Juan, Ponce, Carolina, Caguas, and the entirety of Puerto Rico as the fastest-growing online commercial real estate marketplace.

The State of Commercial Real Estate in Puerto Rico

Puerto Rico is a territory of the United States located in the northeastern Caribbean. San Juan, the nation's capital and largest city, is the island's vibrant economic and cultural hub. 

The San Juan metropolitan area is home to prominent buildings such as the iconic El Capitolio and the bustling Hato Rey financial district. Puerto Rico's economy is diverse, with key industries, including pharmaceuticals, manufacturing, tourism, and information technology, driving significant growth.

The commercial real estate market in Puerto Rico, particularly in San Juan, has seen considerable development activity. One unique aspect attracting residents and investors is the favorable tax treatment available to US citizens who reside full-time on the island. 

With a strategic location offering easy access to North and South American markets, the island has become a focal point for businesses seeking expansion opportunities.

Puerto Rico Regional Breakdown

Puerto Rico has recently witnessed a modest population increase, signaling a positive demographic shift. Besides San Juan, other populated areas include Ponce, Mayagüez, and Caguas, each contributing to the island's urbanization trend. Additionally, upper-income neighborhoods such as Dorado and Palmas del Mar have become popular among US citizens seeking a higher standard of living and a lower tax rate in Puerto Rico.

• Puerto Rico has 3.2 million residents, with over 2 million residing in the San Juan-Bayamón-Caguas metropolitan area.
• The population has declined by 1.2% year-over-year, according to information on DataUSA.io.
• The median age in Puerto Rico is 44.7, about 20% higher than the figure in the US.
• Per capita income is $16,676, and median household income is $24,112 for the island overall.
• However, 1.4% of households make over $200,000 per year and the richest zip codes in Puerto Rico report mean incomes of more than $80,000.

Puerto Rico Job Market

Puerto Rico's economy is characterized by a diverse blend of industries, including pharmaceuticals, manufacturing, and tourism, which have contributed to steady GDP growth over the past decade. Key employers such as Honeywell and Johnson & Johnson have established significant operations in Puerto Rico, leveraging the island's skilled workforce. 

Additionally, sectors like information technology and renewable energy are gaining traction, bolstered by strategic government policies aimed at creating innovation and job creation. Despite recent economic challenges, these concerted efforts are gradually translating into steady job and economic growth.

• According to data from the Federal Reserve Bank of St. Louis, Puerto Rico's gross domestic product is over $113.4 billion, growing by nearly 10% since 2020.
• Over the past year, employment in Puerto Rico and the San Juan metropolitan area has increased by 2%.
• The labor force and employment levels are near historic highs, while the unemployment rate is near a record-low average of 5.2% for Puerto Rico and San Juan.
• The largest employers in Puerto Rico include Popular Inc., ATH Network, First BanCorp, Liberty Puerto Rico, The Cervantes Group, and Triple-S Management Corporation.
• Major industry sectors are manufacturing, tourism, services, pharmaceuticals, electronics, food and beverage, and real estate.
• Becton Dickinson Caribe Ltd., Pepsico Caribbean, Bristol-Myers Squibb, Honeywell, Nypro, and Ipr Pharmaceuticals are some of the larger international companies doing business in Puerto Rico.
• Notable companies headquartered in the country include Air Flamenco, Banco de Ponce, Hospital Damas, Popular Inc., Puerto Rico Electric Power Authority, and Telemundo Internacional.
• A significant master-planned project underway is the $2 billion Esencia luxury development on the west coast of Puerto Rico.
• The commercial real estate market in Puerto Rico is active, with 600 commercial property listings available for lease or sale across the island.
• Under Acts 20 and 22, Puerto Rico offers significant tax benefits for US businesses and citizens residing full-time on the island. These benefits are designed to attract investment and boost economic growth. 
• These incentives can include a 4% corporate tax rate on eligible income and no taxes on capital gains, dividends, or interest for qualifying residents.
• Nearly 30% of residents hold a bachelor’s degree or higher, a little less than the rate in the US.
• University of Puerto Rico, Inter American University of Puerto Rico, and Universidad del Sagrado Corazón are the largest universities on the island.
• Puerto Rico's transportation infrastructure includes major highways like PR-22 and PR-52, the Port of San Juan, and Luis Muñoz Marín International Airport (SJU), providing connections within the island and to major metropolitan areas in the United States and Latin America.

Puerto Rico Industrial Market

Thanks to its strategic geographical advantages, Puerto Rico's industrial market is the second-largest economy in the Caribbean. With its expansive cargo container port, San Juan serves as a central hub for logistics and distribution, attracting local and foreign entities through long-standing tax incentives. 

The island's industrial sector is particularly robust, with a notable presence of top pharmaceutical companies and strong performance in manufacturing and retail. Unlike other regional markets, Puerto Rico's industrial market is characterized by standalone and single-tenant properties, with institutional capital often targeting built-to-suit developments to help mitigate market volatility.

Market overview (JLL Puerto Rico Industrial & Logistic Report, Q4 2023) 

• Inventory: 14,660,000 SF
• Vacancy rate: 4.8%
• Key sale transactions by building: Rio Canas $8.7 million, Urbanizacion El Comandante $5.8 million, Area Industrial El Tuque Ponce $5 million
• Largest submarkets: Bayamón, Cataño, Carolina

Crexi Insights

These are the most recent Puerto Rico industrial lease and sales trends from Crexi Insights (as of June 2024):

For Lease (active)

• Asking rate/SqFt (median): $16 per year
• Median SqFt/listing: 20,100
• Days on market: 293
• Total listings on Crexi: 33 spaces

For Sale (active)

• Median asking price: $2.2 million
• Price/SqFt: $56
• Days on market: 337
• Total listings on Crexi: 12

Sales Comps (past 12 months)

• Median sold price: $435,000
• Sold price/SqFt: $27
• Total sales volume: $3.24 million
• Median SqFt sold/transaction: 15,600
• Total SqFt sold: 407,000 
• Days on market (median): 295

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Puerto Rico Office Market

The office market in San Juan is experiencing a slow pace, with a notable decrease in transaction volume due to the residual effects of the pandemic and the ending of fiscal stimulus from the government. 

Despite the low volume of new lease agreements, there is cautious optimism for marginal growth. Rental rates for class A and AB buildings have remained relatively stable, although high vacancy rates continue to exert downward pressure on rents, leading to slight decreases.

Market overview (JLL Puerto Rico Office Report, H1 2023)

• Inventory: 6,499,121 SF
• Vacancy rate: 29%
• Under construction: 0 SF
• Largest submarkets: Hato Rey, Guaynabo, Caparra

Crexi Insights

If you're in search of the most recent data on Puerto Rico's office market, turn to Crexi Insights as your first choice. The platform provides up-to-date data on the city's commercial real estate market, including lease trends, sale listings, comparables.

Here are the latest stats and trends as of June 2024:

For Lease (active)

• Asking rate/SqFt (median): $18 per year
• Median SqFt/listing: 2,851 SF
• Days on market: 293
• Total listings on Crexi: 259 spaces

For Sale (active)

• Median asking price: $820,000
• Price/SqFt: $120 
• Asking cap rate: 8.0%
• Days on market: 366
• Total listings on Crexi: 27

Sales Comps (past 12 months)

• Median sold price: $182,000
• Sold price/SqFt: $70
• Total sales volume: $365,000
• Sold cap rate: 8.4%
• Median SqFt sold/transaction: 2,334 SF
• Days on market (median): 779

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Puerto Rico Retail Market

The retail market in Puerto Rico is growing, driven by a stable labor market and favorable economic conditions. Retail sales are increasing across various sectors, with electronics stores, cosmetics and beauty products stores, perfume stores, clothing stores, hardware stores, and auto parts stores seeing substantial gains.

Small and medium-sized businesses (SMEs) have also significantly boosted retail sector growth, reporting remarkable increases in sales. These businesses have captured a larger share of the retail market, indicating a healthy entrepreneurial ecosystem and the increasing importance of SMEs in Puerto Rico's economy.

Crexi Insights

Lease and sales trends for the Puerto Rico retail market from Crexi Insights (as of June 2024):

For Lease (active)

• Asking rate/SqFt (median): $24 per year
• Median SqFt/listing: 2,501 SF
• Days on market: 293
• Total listings on Crexi: 293 spaces

For Sale (active)

• Median asking price: $5 million
• Price/SqFt: $357
• Asking cap rate: 6.1%
• Days on market: 131
• Total listings on Crexi: 26 

Sales Comps (past 12 months)

• Median sold price: $7.33 million
• Sold price/SqFt: $438
• Total sales volume: $90.5 million
• Sold cap rate: 8.4%
• Median SqFt sold/transaction: 16,700 SF
• Days on market (median): 278

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Puerto Rico Multifamily Market

High median asking prices and extended time on the market for active listings currently characterize the multifamily market in Puerto Rico. With a median asking price of over $3.5 million and a price per square foot of around $300, investment opportunities in the San Juan market remain strong despite a relatively slow transaction pace.

Market overview

• Total housing units: 1,598,570
• Multi-unit inventory: 319,714 units
• Average rents in San Juan range from $1,800 for a studio to $7,500 for a 4-bedroom rental.
• Rents have increased by about 17% year-over-year.

Crexi Insights

Here are the most recent Multifamily Insights on Puerto Rico from Crexi (as of June 2024):

For Sale (active)

• Median asking price: $3.52 million
• Price/SqFt: $300
• Price/Unit: $431,000
• Days on market: 712
• Total listings on Crexi: 6

Sales Comps (past 12 months) 

• Median sold price: $148,000
• Total sales volume: $132 million
• Total SqFt sold: 4,762 
• Days on market (median): 287

Find Puerto Rico multifamily apartments for sale.

Get more in-depth Puerto Rico market data with Crexi Intelligence.