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Este informe no está disponible en español. Editorial & Column CARIBBEAN BUSINESS Investors shopping for local malls; Credit-ratings agencies seek answers ELISABETH ROMAN March 3, 2005 There is no doubt Puerto Ricans love to shop and investors, who are betting on island residents not changing their spending habits anytime soon, are themselves shopping for everything from enclosed regional shopping centers to community strip malls. Last year alone, 15 malls in Puerto Rico changed hands in sales that cost investors $1.5 billion. Every local mall owner in Puerto Rico seems to have been approached by investors seeking to acquire their mall properties. Most owners, however, seem unwilling to sell, recognizing the future economic potential of Puerto Rico’s shopping malls. Nonetheless, acquisition activity for Puerto Rico malls is expected to continue throughout 2005, as stateside companies continue to express interest in purchasing all types of mall properties. Stateside companies are even seeking to acquire strip malls that have yet to commence construction, offering to pay more than the projects’ estimated values. Why? Because Puerto Rico retailers have consistently reported higher sales per square foot than comparable stores on the U.S. mainland and local malls report average occupancy rates that are over 95%. The best shopping malls in Puerto Rico are averaging sales of anywhere between $300 and $400 per square foot, while Plaza Las Américas, an exceptional mall in a league of its own, reports sales of up to $1,000 per square foot in some stores. Compared to shopping malls on the mainland, where the average sales per square foot don’t reach $300, it’s easy to understand why investors are so attracted to Puerto Rico’s shopping mall properties. Existing malls in Puerto Rico are also expected to continue expanding this year, building upwards due to the lack of land, to accommodate the new and growing number of retailers; proving that the retail-commerce sector remains strong and continues to generate employment on the island. Thanks to the employment generated by this sector, students, mothers, and others who prefer working part-time or during flexible hours have the opportunity to do so. Credit-ratings agencies seek answers Just as CARIBBEAN BUSINESS has been reporting for several weeks now, the credit analysts from Standard & Poor’s and Moody’s visited Puerto Rico this week to meet with commonwealth government officials. With the outlook for the Government Development Bank and the government’s General Obligation Bonds downgraded recently from stable to negative, the credit-ratings agencies came to see what the new administration is doing to fix the government’s fiscal crisis. So far, it’s been a blame game with officials from the Calderón administration saying they didn’t leave a "structural deficit" that is estimated to go as high as $2 billion, and officials from the new administration saying they found a government that was in a state of fiscal crisis. As the new administration enters its third month in office, much has been said about fiscal and tax reform but no official plans as yet have been presented. A lot is said about the Commonwealth’s bureaucracy, which increased substantially over the past four years, yet nothing is being done to control the government’s spending beyond grounding a few official vehicles and reducing cellphone usage, a drop in the bucket of the deficit. As CARIBBEAN BUSINESS has been saying for the past three months, what is required to repair the government of Puerto Rico’s fiscal crisis is a complete government restructuring and a tax reform. Every commonwealth agency must be evaluated to see if its services are still needed or if they are duplicating the services being provided in another agency. Government agencies need to be downsized or eliminated altogether with services outsourced or privatized. And, we must allow the private sector to do what it does best: create employment, maintain adequate levels of productivity, and provide the services when and where they are needed. This Caribbean Business article appears courtesy of Casiano Communications. or
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