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 opportunities from an investment perspective. Thanks to Crexi, it’s never been easier to search for Puerto Rico investment property.
Per Ryan Christiansen of Puerto Rico-based Christiansen Commercial, the island’s most prominent firm, “The post-Covid economic recovery and outlook for Puerto Rico looks better than after Hurricane Maria (September 2017), [thanks to the] $45 billion in federal funds from the CARES Act, the CRRSA Act, and the new American Rescue Plan. This stimulus combines with the significant reduction of the debt burden in the Oversight Board’s new Plan of Adjustment [which is] restructuring approximately $35 billion of Puerto Rico’s debt down to $7.4 billion. These are […] significant steps forward in laying the foundation for Puerto Rico’s long-term economic recovery and growth.” The island is also slated to receive roughly $65 billion in federal funds to improve its infrastructure and foster economic development for the next ten years.
Principals and tenants across the US, representing 92% of Crexi’s traffic, harness the platform’s search functionality and in-depth market research to browse and identify the best Puerto Rico properties for their needs and to connect with local brokers.
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 $300 billion in CRE transactions and marketed over $1.3 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
Located in the eastern Caribbean, the US Territory of Puerto Rico is home to a skilled, bilingual, and highly educated workforce. With over 3 million US citizens living in Puerto Rico, the island boasts a cost of living much more affordable than many parts of the continental United States, along with tax incentives and resources focused on promoting entrepreneurship.
Businesses and residents in Puerto Rico receive numerous incentives to attract investment from industries, support small and medium merchants, and invest in the knowledge services sector. Tax incentives in Puerto Rico include reduced capital gains, passive income tax, and very low corporate tax rates.
Puerto Rico is proportionally the largest opportunity zone (OZ) in the US, with over 98% of the island home to 863 OZs. The Puerto Rican government is proactively pursuing infrastructure and development projects, including the Roosevelt Roads Redevelopment Project and Science City, a 70-acre parcel being developed as a globally recognized innovation center.
Puerto Rico Regional Breakdown
According to the most recent report from the US Census Bureau, the population of Puerto Rico has declined by 11.8% since 2010. Migration to the US mainland is concentrated in younger residents seeking greater economic opportunity as the island continues to recover from the effects of Hurricane Maria in 2017:
- Puerto Rico is home to nearly 3.3 million residents.
- The island of Puerto Rico is 3,515 square miles in size.
- Just over 2.1 million people live in the San Juan metropolitan area.
- The population of Puerto Rico has declined by 0.05% year-over-year.
- Largest cities by population in Puerto Rico are San Juan, Bayamon, Carolina, Ponce, Caguas, Guaynabo.
- The median age in Puerto Rico is 43.1 years, with 51% of the population between 20 and 59.
The Puerto Rico Job Market
Job gains in Puerto Rico are substantial, with the government proactively seeking strategies to bolster economic growth. Over the next ten years, Puerto Rico is slated to receive about $64 billion in federal funds to improve the island’s infrastructure and increase economic development:
- The GDP of Puerto Rico is $105 billion and has grown by nearly 9% over the past decade.
- Employment growth in Puerto Rico was 3.44% last year, while median household incomes increased by 0.88%.
- The unemployment rate in Puerto Rico is 8.1% (June 2021).
- Job sectors in Puerto Rico showing the most growth include leisure and hospitality, construction, trade and transportation, and professional and business services.
- Puerto Rico is proportionally the largest opportunity zone in the US, with 98% of the island designated as an OZ.
- Growth initiatives in Puerto Rico include boosting entrepreneurship, retaining US and foreign businesses, and expanding global business recruitment beyond the pharmaceutical industry.
- Major industry sectors in Puerto Rico are clothing and textiles, processed foods, petrochemicals, electronic devices, and drug manufacturing.
- Top companies in Puerto Rico include Amgen, University of Puerto Rico, Ethicon, Microsoft, Roche, Pfizer, Janssen, Johnson & Johnson, Procter & Gamble, JetBlue, Bayer, and Eli Lilly and Company.
- Strategic development projects on the Island of Puerto Rico include Roosevelt Roads Redevelopment Project, Ponce Port Development, PR-127 Corridor, Dorado Health Village, District Live entertainment project, Science City, and the Puerto Rico Film District.
- The largest universities and colleges in Puerto Rico are the University of Puerto Rico, Sistema Universitario Ana G. Mendez, American University, and the Pontifical Catholic University.
- Nearly 79% of Puerto Rican residents are high school graduates, while over 27% hold a bachelor’s or advanced degree.
Transportation infrastructure in Puerto Rico includes two state highways, three international airports, and nine seaports. San Juan Port is the largest seaport in Puerto Rico and one of the busiest in the US.
Puerto Rico Industrial Market
According to Christiansen Commercial, manufacturing continues to be the largest economic sector in Puerto Rico, composed of almost half the gross domestic product. Puerto Rico’s manufacturing index has exceeded pre-pandemic levels and the industry remains strong amid COVID-19.
The demand for Class A industrial property in Puerto Rico has helped keep real estate prices on the island rising, with the market seeing a significant shift towards industrial properties. Puerto Rico is the fifth largest manufacturer of pharmaceuticals in the world by volume, as manufacturers shift away from traditional manufacturing centers in Asia:
- Average asking rent for Class A industrial: $10.78 – $15.00 per SF per year, net
- Average asking rent for Class B industrial: $7.83 – $13.27 per SF per year, net
- Class A gross annual rent change: -4% – +63%
- Class B gross annual rent change: -23% – +179%
- Business incentives: Export, financial, manufacturing, renewable energy, private equity
- Main industrial submarkets: San Juan, Guaynabo, Bayamon, Carolina, Ponce, Caguas
Puerto Rico Office Market
Office space absorption in Puerto Rico is projected to increase substantially for the remainder of 2021 and into 2022. Per Christiansen Commercial, this is driven mainly by the Puerto Rico Incentives Code (aka Act 60), an all-encompassing tool designed to accelerate economic growth through investment, innovation, exportation, and job creation. Act 60 reduces income taxes and provides exemptions from taxes on dividend distributions, property taxes, and municipal taxes.
The San Juan office market is the third-largest in the Caribbean, behind Panama and Costa Rica. In 2021, office building activity in San Juan, Puerto Rico returned to normal levels seen before the pandemic began. The economy is enjoying an upbeat trend as federal funds and funds to rebuild the country’s infrastructure continue to flow into the island:
- Total office inventory: 10,273,973 SF
- Average asking rents: $20.18 per SF per year, gross
- Overall vacancy rate: 14.6%
- Office rent change: Class A and B rents increasing since the second half of 2020
- Relocation trends: Proximity to urban areas less important with a digitizing economy
- Main office submarkets in San Juan: Hato Rey, Guaynabo Metro Office Park, Caparra
- Secondary office submarkets in Puerto Rico: Aguadilla and Guayama
Puerto Rico Retail Market
Although retail sales declined during the pandemic, the demand for retail space to lease in Puerto Rico and shopping mall sales remain strong. Prices are on the rise for Class A retail in the San Juan Metro Area as tourism and relocation grow:
- The market is largely dominated by Class A and Class B shopping centers
- Total retail inventory: 13,200,000 SF in top 20 shopping centers
- Plaza Las Americas is the largest shopping center with 300 retail suites
- Total retail trade establishments: 9,364
- Prices for retail space in Puerto Rico has increased dramatically over the past three quarters
- Average asking rent for Class A: $11.16 – 24.94 per SF per year, NNN
- Average asking rent for Class B: $7.56 – 16.98 per SF per year, NNN
- Largest retail markets: San Juan, Carolina, Guaynabo, Humacao
Puerto Rico Multifamily Market
Real estate in Puerto Rico continues to benefit from the pandemic, as residents and investors come to the island in search of tax benefits and a better quality of life. Demand for housing in San Juan and other parts of the island far exceed supply, making housing prices in Puerto Rico soar:
- Total housing units: 1,559,505
- Share of multifamily units: 19%
- Renter occupied: 31%
- Average persons per household: 2.7
- Median property value: $110,300 declined by 0.45% year-over-year
- Most popular neighborhoods: Santurce, Sabana Llana Sur, Monacillo Urbano
- Median household income: $20,474
- Per capita income: $13,345
How Crexi Connects Buyers and Tenants to Puerto Rico CRE Properties
Thanks to fast-tracked economic and infrastructure development as well as thriving market fundamentals, Puerto Rico is well-poised to be an advantageous investment for buyers and tenants alike.
Buyers and tenants nationwide discover Puerto Rico properties using Crexi’s open marketplace. A hotbed across asset classes, particularly manufacturing and office development, Puerto Rico’s fast-tracked economic growth has attracted investor and business interest at the fastest clip since 2017.
Those interested in investing or setting up business in Puerto Rico can use Crexi’s free search tool to browse properties. Interested parties can further refine searches by:
- Asset class
- Square footage
- Price/rate per square foot
- Cap rate
- And other filters
Upon discovering the perfect Puerto Rico property, buyers and tenants can easily reach out to the listing broker via Crexi’s secure messaging system. Property seekers can download brochures and flyers, review offering memorandums, and even submit letters of intent (LOI) all through Crexi.
Intelligence Connects Investors to Data and Market Knowledge
Investors and tenants seeking the perfect Puerto Rico investment can harness Crexi’s Intelligence to inform their decision-making. Intelligence is a subscription-based service that equips principles with millions of third-party-verified sales comparables and property records, as well as over 50 detailed MSA market reports.
The Insights tab is also available on every property page, providing an in-depth look into a property’s real-time demographic information, average asking prices in the region, square footage averages, and other due diligence data.
Crexi Intelligence enhances user’s market knowledge and cuts down on research efforts, allowing users to make the most informed investment decisions possible.
How Puerto Rico Brokers Win with Crexi
Crexi’s marketplace features hundreds of Puerto Rico properties for sale and for lease across the island. Industrial and office assets are among the most popular Puerto Rico properties, as are land and multifamily developments looking to serve newcomers to the island.
Throughout Puerto Rico, local brokers can easily list and manage assets across property types, including:
- Industrial units
- Manufacturing warehouses
- Office buildings
- Retail developments
- Mixed-Use properties
- Hospitality buildings
- Non-traditional properties such as data centers, medical offices, utilities, etc.
Puerto Rico brokers equipped with Crexi’s digital tools can easily navigate their listings from first posting to close. Thanks to Crexi’s lead-management dashboard, brokers can see real-time activity of those interested in their Puerto Rico property. Crexi’s encrypted file vault also allows brokers to aggregate and manage due diligence paperwork all in one centralized location.
And while these tools are useful by themselves, Crexi’s broker technology fully reveals itself with Sale PRO, Lease PRO, and All PRO.
Crexi All PRO
Crexi PRO simplifies and accelerates brokers’ pipelines with facile lead management tools, easily branded lead reports, and detailed marketing analytics. PRO brokers’ listings receive preferential placement atop Crexi’s search pages, making them instantly viewable to prospective buyers and tenants.
Crexi also sends email blasts with featured PRO listings in a curated list customized to each buyer or tenant’s search behavior. This machine-learning-powered relevance procures a 10-15% higher click-through rate on PRO-powered Puerto Rico properties.
Brokers using Crexi PRO also enjoy full access to Intelligence’s 40 million sales comparables and property records database at no additional cost.
Using Crexi PRO, brokers in Puerto Rico and nationwide can quickly connect with the 176% increase in leads interested in Puerto Rico since Q4 2020 and over 3 million leads across the country searching for property in 2020.
On average, PRO brokers attract 125% more leads and close six-to-eight more deals than non-PRO users.
Contact firstname.lastname@example.org to learn more about All PRO.