Commercial Real Estate - Puerto Rico

The Commercial Real Estate market market in Puerto Rico is projected to reach a value of US$80.41bn by 2024.
It is expected to show an annual growth rate (CAGR 2024-2029) of -0.32%, resulting in a market volume of US$79.14bn by 2029.
In global comparison, the United States will generate the most value in Real Estate, with US$25.3tn in 2024.
Despite the economic challenges faced by Puerto Rico, the commercial real estate market continues to show resilience and attract foreign investors seeking opportunities in the Caribbean.

Definition:

Commercial real estate can be defined as properties that are used for business purposes, such as office buildings, retail spaces, warehouses, and industrial properties.

Additional information:

The commercial real estate market contains the value of commercial properties as a key performance indicator. This is the worth of all office buildings, retail spaces warehouses, and industrial properties for the timeline of our data coverage.

Office buildings
Retail spaces
Warehouses
Industrial properties

Residential real estate
Publicly owned buildings used by the local government
Buildings used for public health care services

The Commercial Real Estate market in Puerto Rico is experiencing significant development and growth.

Customer preferences: Customers in Puerto Rico are increasingly seeking commercial real estate properties that offer a mix of retail, office, and residential spaces. This trend is driven by the desire for convenience and accessibility, as well as the growing popularity of mixed-use developments. Additionally, there is a strong demand for modern and well-maintained properties that offer amenities such as parking, security, and green spaces.

Trends in the market: One of the key trends in the commercial real estate market in Puerto Rico is the increasing investment in tourism-related properties. Puerto Rico is a popular tourist destination, and investors are capitalizing on this by developing hotels, resorts, and entertainment venues. This trend is driven by the growth of the tourism industry in Puerto Rico, as well as the government's efforts to attract more visitors to the island. Another trend in the market is the rise of coworking spaces and flexible office solutions. With the increasing number of startups and entrepreneurs in Puerto Rico, there is a growing demand for flexible workspaces that offer affordable and collaborative environments. This trend is also driven by the changing work culture, with more people opting for remote work or freelancing.

Local special circumstances: Puerto Rico's status as a U. S. territory provides certain advantages for the commercial real estate market. Investors from the mainland United States are attracted to Puerto Rico due to its favorable tax incentives, including tax breaks for businesses and individuals. This has led to an influx of investment in the commercial real estate sector, particularly from investors looking to take advantage of these incentives. Additionally, Puerto Rico's unique cultural heritage and natural beauty make it an attractive location for commercial real estate development. The island's rich history, vibrant arts scene, and beautiful beaches draw tourists from around the world, creating opportunities for commercial real estate projects that cater to the tourism industry.

Underlying macroeconomic factors: The development and growth of the commercial real estate market in Puerto Rico are also influenced by underlying macroeconomic factors. For example, the strong performance of the U. S. economy has had a positive impact on Puerto Rico's economy, leading to increased consumer spending and business investment. This has created a favorable environment for the commercial real estate market to thrive. Furthermore, the government's efforts to attract foreign investment and promote economic development have contributed to the growth of the commercial real estate sector. Initiatives such as tax incentives, streamlined regulations, and infrastructure improvements have made Puerto Rico an attractive destination for both domestic and international investors. In conclusion, the Commercial Real Estate market in Puerto Rico is experiencing significant development and growth, driven by customer preferences for mixed-use properties and modern amenities. The market is also influenced by trends such as the investment in tourism-related properties and the rise of coworking spaces. Puerto Rico's status as a U. S. territory, its unique cultural heritage, and favorable macroeconomic factors contribute to the growth of the commercial real estate market in the region.

Data coverage:

Figures are based on value of commercial real estate.

Modeling approach / Market size:

Market sizes are determined by a bottom-up approach. As a basis for evaluating this market, we use national statistical offices. Next, we use relevant key market indicators and data from country-specific associations such as share of industry, manufacturing, and services of the GPD, price level index, GDP. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the market, for example, exponential trend smoothing.

Additional Notes:

The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war are considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

After a challenging period during the coronavirus pandemic, the European commercial real estate sector now faces additional pressures, including inflation, record-high interest rates, and sluggish economic growth. In 2022, these challenges were evident through contracting investment volumes in the two largest markets—the United Kingdom and Germany. Although the shifting economic landscape has impacted all commercial real estate subsectors, industrial and logistics—a property type that demonstrated incredible resilience during the pandemic—continues to be the most popular investment class. The performance of the sector is closely tied to the state of the economy, explaining why cities with flourishing capital markets garner the most interest from investors. In 2023, investors identified London, Paris, and Madrid as the three most attractive markets.

Growing demand for industrial and logistic real estate is prominent in Europe, driven by the increase in online retail sales rather than in-store. All the Nordic countries saw steady growth in their e-commerce sales during the past fifteen years and more, and the growth is expected to continue. Investments in the industrial and logistic real estate industry have generally been at a higher level during the last few years. The highest investment value among European countries in the first half of 2021 was in the United Kingdom, while Sweden topped the list among the Nordic countries, and was fifth in terms of industrial and logistics investment in real estate in Europe that year.