Strong demand for retail in Puerto Rico, REITs say

At Taubman Centers’ Mall of San Juan, 81 stores are open, with only 14 still dark. Free People, H&M and Urban Outfitters are planning to open their stores at the upscale mall later this year. “The sales productivity of the center of the stores that are opened was unbelievable this quarter,” said Robert S. Taubman, the landlord's chairman, president and CEO.

Tourism has yet to recover. Seven or eight resort hotels will open later this year, Taubman said. In the meantime, local shoppers are driving sales.

Before the storms, Puerto Rico had only five square feet of retail per capita for some 3.5 million people. That compares to about 25 square feet per capita in the mainland U.S. “That five square feet was dramatically impacted by hurricanes,” Taubman said. Much of this space was uninsured and is unlikely to reopen, he says. Because of the island’s lack of suitable post-storm space, Taubman Centers is drawing the island’s top restaurant operators to its property, he says.

“The surviving projects, projects like ours, are going to benefit from lower overall supply,” he said. “So if the island rebuilds and tourism returns, we expect to continue to grow. It could be a long process, but we’re encouraged by the sales productivity, the traffic in the shopping center and how the restaurants are doing.”

The company is still negotiating with its Saks Fifth Avenue tenant as to when — or even if — its store at Mall of San Juan will reopen.

Meanwhile, at DDR Corp.’s Plaza Del Sol, in Bayamón, the island’s first Dave & Buster’s boasted the chain’s strongest opening-day performance ever. “Our Plaza Palma Real shopping center, which incurred the most damage in the hurricane, had a grand reopening of its Walmart anchor just last week, with traffic consistent with a typical Black Friday,” said DDR President and CEO David R. Lukes on an earnings call. “The recovery story is compelling, and we're seeing positive sales accounts at key national anchors like Walmart and Home Depot. In all, I'd say that, despite challenges, Puerto Rico is doing much better than many would think.”