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Rents At Local Shopping Malls Could Go Up 10% This Year
Demand Rising For Space In All Kinds Of Malls
By TAINA ROSA
February 12, 2004
Rents at local shopping malls are expected to increase by up to 10% this year, in response to a surge in demand for space in both enclosed and strip malls and to a lack of mall development.
"Rent per square foot at local enclosed malls range from $30 to $50," said Jorge Fournier, executive vice president of Commercial Centers Management Inc. Rents in San Juan metro-area strip malls are $20 to $30 per square foot; outside the metro area, they range from $12 to $18 per square foot, according to Ilsa Vidal, leasing director for Commercial Properties Development Corp.
Having seen demand for space at local malls boom in the past six to nine months, Fournier and Vidal both expect rent hikes this year. "There are new players interested in the local market," said Fournier. Added Vidal, "The market is improving very much. Everyone wants to set up shop here; people just keep calling."
The increased demand for mall space in Puerto Rico was evidenced by attendance at International Council of Shopping Centers recent deal-making activity at Caribe Hilton hotel in San Juan, which Fournier said was higher than last years. Greater demand, more competition among potential tenants for space at local malls, plus virtually no new construction of malls create the perfect recipe for landlords to raise rents.
In 2003, the local Regulations & Permits Administration approved construction of only five shopping centers. The largest of these malls will occupy about 315,000 square feet; none of the others will surpass 59,000 square feet (CB Dec. 25, 2003).
"If more malls were to be built, they probably would be less than 100,000 square feet. They would be more community-type centers with pharmacies and supermarkets as anchors," said Fournier.
Vidal also noted contracts have much shorter terms today, meaning landlords can raise rents more often. "It used to be tenants contracts were for 10 or 20 years, during which you couldnt raise rents, unless there was a special circumstance. Now, contracts are usually for five years, with the option to renew them for three more," she said.
This Caribbean Business article appears courtesy of Casiano Communications.