Commercial Investment Real Estate May/June 2019 | Page 15

vacant commercial buildings. Getting tenants into these spaces
has been a challenge because the market is shrinking due in part
to thousands of Puerto Ricans relocating to the mainland after
the hurricane. opportunity zones. It was approved by the local Senate but is
stalled in the House.
CIRE: What’s the current state of the market? Rivera: The commercial real estate market is improving at an
accelerated pace. Opportunity zones and tax incentives are helping.
Almost the whole island is an opportunity zone. But our cli-
ents will not be able to take advantage of the opportunity zone
program in Puerto Rico this year due to the holdup in the House.
The Puerto Rico CCIM Chapter is actively lobbying for the
approval of this law, which is essential for opportunity zone
investment on the island.
Also, Puerto Rico Governor Ricardo Rossello has introduced
legislation to extend opportunity zones to Puerto Rico residents.
The legislation also provides expedited permitting processes that
will benefit commercial real estate development.
Puerto Rico has always had a strong retail market. Historically,
anchor stores like Sears, JCPenney, and Macy’s have been among
the top producers, despite the island’s per capita income being
near the lowest in the U.S.
Rivera: Class A office buildings have seen a marked increase.
There are waiting lists on Class A buildings, and rents have gone
up. Since the hurricane, companies are looking for buildings with
full backup generators and water cisterns.
There also is currently a shortage of warehouses. Many were
destroyed in the hurricane, and the few that remained were leased
for relief supplies. Puerto Rico’s recent tax incentives for corpo-
rations to relocate to the island also have created demand for
additional warehouses. Even though there is a high demand for
Class A offices and warehouses, many investors are waiting for
the local legislature to pass the opportunity zone laws to invest
on the island.
CIRE: Where are the investments coming from to rebuild?
Rivera: There are large private equity and hedge fund invest-
ments in Puerto Rico as a result of Acts 20 and 22. However,
the local government has not yet passed the law to regulate
CIRE: What opportunities do you see ahead for commercial
real estate professionals?
Catherine Simpson Olson is a Chicago-based writer and editor.
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