Puerto Rico Pushing For Hands Off Redevelopment
As Puerto Rico continues to work around the $70B public debt crisis that threatens its economy, the commonwealth's governor, Ricardo Rossello Nevares, and another key economic development official are pushing for private development that could help tip the economic scales.
Nevares said the island nation is pushing public-private partnerships to help various redevelopments in the country that will ultimately lead to job creation. With the economic crisis, Puerto Rico's unemployment rate topped 12% as of January.
“Open for business means we are going to foster economic growth and private investment,” said Manuel Laboy, secretary of economic development and commerce of Puerto Rico, during a Bisnow event focused on Latin American investment and development last week in Miami. “It means that the government needs to be out of the way.”
Laboy said the government has targeted to grow tourism from being 7% of the total economy to 15% within five years.
“That means that we'll need more hotels. That means that we'll need more facilities,” he said.
One of the big redevelopment pushes is with the former Roosevelt Roads Naval Station in Ceiba, which is now home to the Jose Aponte de la Torre Airport. The 9,000-acre campus is mostly being targeted for complete redevelopment, including privatizing the commonwealth's ferry system from the coast that goes to the islands of Cublera and Vieques, Leboy said.
Puerto Rico is also in talks with companies to produce low-cost energy at Roosevelt Roads — 10 cents a kilowatt hour — as well as install fiber optic lines in the project, he said.
Jay Smith, president of nFusion Consultancy, already is a believer in the Puerto Rico recovery story. His firm specializes in “broken” projects for a value-add play.
“Those opportunities in the United States are virtually gone," Smith said. "They are very thin."
The firm invested in Coco Beach, a 200-acre oceanfront project that holds a 36-hole golf course that hosts the PGA tour. Smith told Bisnow in a previous interview that nFusion is marketing a development plan for a hotel and up to 1,000 homes as well as a small town center for a mixed-use community.
“Ultimately, we'll sell it or partner with a developer, most likely from the United States,” he said.
Because of the bond crisis, Smith said real estate values have bottomed out and are ripe for investing. That is helped by Puerto Rico having a seamless regulatory environment, much of which is run by U.S. government entities.
“It's a very similar and, seems to me, much less risky environment,” he said.