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Person of the Year - Private Sector

Jaime Fonalledas, Jr.

President, Empresas Fonalledas

He has been the force behind the most significant expansion in the retail industry in years. Better known as the man behind Plaza Las Americas, Fonalledas rules over a diversified and complex corporate conglomerate.

December 21, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.


A handful of hyper-famous artists–like Madonna or Oprah–are so well known that they go on a first-name basis. Plaza Las Americas is such a household brand in Puerto Rico that for most people on the island, it is just Plaza.

Even though most shopping centers on the island have the "p" word in their names, when people say ‘I’m going to Plaza’ you know they are going to Puerto Rico’s premier shopping mall in Hato Rey, Plaza Las Americas.

No shopping center has received more media coverage this year than Plaza. As we wind up 2000, Plaza is just finishing a three-year long, $250 million expansion and remodeling that boasts the addition of close to 100 stores occupying 790,000 square feet of brand-new retail space, the addition of 2,600 parking spaces, and the creation of 3,000 new jobs at the already mega-star mall.

With the expansion, Plaza now stands at 2.1 million square feet of leasable area and features 300 specialty stores, three anchor stores (JCPenney, Sears, Macy’s), 39 fast-food/restaurants, 21 movie screens, and 10,800 parking spaces with adjacent retail areas comprising an additional 320,000 square feet of retail. Altogether, Plaza is now expected to contribute $256 million a year to the local economy.

Meet the man behind the mall.

Jaime Fonalledas Jr., has been chosen CARIBBEAN BUSINESS Man of the Year 2000 for his vision and action as the leader behind the evolution that took Plaza Las Americas–already one of the top-performing retail spaces in the world–to new heights.

"It has been a process of many years, a lot of planning and team work in each area, where the leasing team has played an important role," Fonalledas says. "[The process] is in a major way what has given Plaza the success it has always experienced. We’ve marketed both Plaza Las Americas and Puerto Rico."

Husband to Zoraida Ferraiuoli and father of four, Fonalledas also presides over one of Puerto Rico’s largest locally owned conglomerates, Empresas Fonalledas Inc., with holdings in dairy cattle operations, milk processing plants, non-dairy food industries, plastics manufacturing, real estate ventures, and banking operations. Employing more than 9,000 people in total, Empresas Fonalledas companies include Plaza Las Americas, Plaza Del Caribe, Tres Monjitas, Vaqueria Tres Monjitas, Ganaderia Tres Monjitas, and franchise Soft & Creamy.

Having grown up in a family linked for generations to the island’s agricultural industry, Fonalledas is one passionate supporter. "We have a great quantity of productive land for agriculture that is not being used to capacity…We definitely need a global, aggressive, and proactive vision with a desire to make the [agriculture] sector produce," he says.

Meanwhile, his company’s investment of more than $75 million in new real estate projects unrelated to the shopping mall, first reported by CARIBBEAN BUSINESS (Dec.7), suggests the company will continue diversifying its business.

As a role model, Fonalledas sponsors various foundations, some to help children and others to help the development of arts and culture in Puerto Rico. "We are firm believers in young people, children, and education. My parents emphasized that we need to be involved in all facets of our culture, which includes all aspects of art."

Fonalledas’ love for art and culture is evident in the renovation of Plaza Las Americas, dotted with sculptures and medallions by local artists, and an interior architectural design depicting elements of Puerto Rico’s culture, like the arrival of Christopher Columbus to island shores and the colonial beauty of Old San Juan.

The year of Plaza

In the 1960s, Empresas Fonalledas started the development of Plaza Las Americas on 46 acres of dairy pasture at the intersection of what was expected to be the island’s east-west and north-south highways. The site is a stone’s throw away from Fonalledas’ childhood home at the corner of today’s Chardon Avenue and Cesar Gonzalez Street, where Empresas Fonalledas’ Torre Chardon is about to be completed.

For many years, Plaza has served as ambassador of retail in Puerto Rico as its outstanding sales statistics have lured stateside retail giants to choose Plaza as a first-time venture outside the U.S. mainland. Plaza’s specialty retail sales average more than $700 per square foot, more than double the U.S. average, while sales from its La Terraza food court, at $1,844 per square foot, quadruple sales of its Stateside counterparts. In terms of overall sales per square foot, Plaza is one of the top shopping malls, not only in the U.S., but in the world.

This year Plaza has significantly demonstrated its prowess as the leading retail force in Puerto Rico with the October opening of a 255,000-square-foot Macy’s store, the retail giant’s first outside the U.S. mainland. The arrival of Macy’s–a division of Federated Department Stores, the largest department store company in the U.S.–is considered a milestone in the island’s retail history.

Although phase one and two of Plaza’s expansions were completed in 1998 and 1999–which included the opening of the largest JCPenney in the world at 350,000 square feet, the refurbishing of 105,000 square feet of retail space at JCPenney’s previous site, and the construction of a bridge to provide access from De Diego Expressway–in 2000 Plaza unveiled an additional 335,000 square feet of retail and entertainment space, including the opening of Macy’s, for a total of 790,000 square feet of new retail space in three years.

"Years back we knew we needed to bring a new anchor department store that would allow Plaza to expand," Fonalledas said. "Macy’s brings a new and different component to the local market and allows a balance in the flow and circulation of people in Plaza. Other components including the new theaters, Borders, and Old Navy do the same."

Borders Books & Music opened in February. The 28,750-square-foot store now ranks among the chain’s top 10 stores in terms of revenue and No.1 in coffee-shop sales. Other retailers that opened their first stores in Puerto Rico this year include Bailey Banks & Biddle, Betsey Johnson, Rampage, Big Planet, Discovery Channel, and Whit House Black Market.

"I think one the things Plaza will offer the local consumer is a different retail-mix that before you could only visit when traveling off-island," he says. "Puerto Ricans like to travel and spend money in their travels. Now that retail offer is here in Puerto Rico at your convenience."

A mirror of performance, existing retailers took the opportunity to expand within the mall. Banana Republic traded its 4,400-square-foot locale for a 20,000-square-foot space, Gap expanded from 9,900 square feet to 18,000 square feet in the first level, and Gap Kids moved from a 2,800-square-foot store to the 9,900-square-foot space previously occupied by Gap.

But not everyone can open a store in Plaza. "It is very easy to say Plaza Las Americas has space available, start leasing," he says. "We don’t simply lease space like we were leasing an office building. We are very selective and careful because we want to ensure we offer the best mix to our clients and local consumers. It is a process that requires time," he says.

Fonalledas shuns criticism that the expansion of mega shopping malls is hurting small independent retailers in town centers. "One can’t pretend to operate a business in today’s Puerto Rico the same way a business was operated 15 years ago. Time keeps running, and every day we have to face change and look at it as opportunities. If we look at change as a problem, we should simply close doors and stop operating."

"Retail is a very complex and extremely risky business. It’s necessary to be in the forefront of constant changes in consumer preferences," he continued. "To the extent retailers can’t anticipate these changes, in consumer tastes, they lose opportunities for doing business."

If shopping centers in Puerto Rico are more than a place to shop, then Plaza Las Americas is indeed the ultimate outing for local families. "From day one, we knew that Plaza would be more than a mall or shopping center, hence its name," he said. "It’s not only a shopping center but a plaza, where social and cultural elements have always converged, featuring exhibitions and music in the hallways, in addition to other activities."

Plaza’s Future

Just like on the mainland, retail activity in Puerto Rico has started to soften for most of this year and retail experts believe it could be the beginning of a possible retail recession and a sign of possible saturation. Fonalledas, however, remains positive.

"I am an optimist," he says. "After the government transition we are going through is over, the government and business sectors will aggressively continue this process of growth for our economy." When asked if the island is mall-saturated, he says, "One can’t generalize in Puerto Rico. I understand that Puerto Rico has some areas where the needs have been met to capacity, but in other places they haven’t."

"We have to be very conscious about what is the market. Obviously, our business, like any other business locally, depends on the growth of the overall economy. To the extent that all economic sectors increase productivity and efficiency, and thus generate more activity, Plaza Las Americas, as well as for other competitors, will enjoy more opportunities."

Fonalledas points to economic development as a key for Plaza’s continued growth. "For instance, Plaza Las Americas brought Macy’s to Puerto Rico in this expansion. If Puerto Rico’s different markets continue to sustain a solid and healthy growth, Macy’s will look at other alternatives for stores."

"Specifically, we have a shopping center in Ponce. As the famous transshipment port that has been proposed for the south gets built, which we are all anxious to see happen, it will definitely result in a positive economic impact for the entire region. Therefore, a store like Macy’s could consider opening a store in our Plaza del Caribe in Ponce."

But if economic growth slows down, "Even if we assume that Puerto Rico is not having a proactive or dramatic economic growth, Plaza Las Americas has to keep evolving with changes to cater to market needs."

Where Plaza will definitely grow in the near future is in cyberspace. "Plaza Las Americas will definitely have an element of Internet that we are working," he says. "But I will not say that the future of retail is the Internet. It will never substitute the unique experience of re-discovering Plaza Las Americas by visiting all the new stores we’ve opened for you. But we’re going to be there."

Arts, culture, family

There is more to life than retail, cows, and real estate.

Fonalledas has turned Plaza into an outlet for local and international artists to present their talent for its many visitors to appreciate. "I wanted to bring an artistic elements to Plaza Las Americas," he says. "So I called my childhood art teacher, Myrna Baez, and asked her to help me."

Local artists Nick Quijano, Martita Perez, and Myrna Baez were commissioned the floor artwork for Plaza’s four atriums. They created four medallions representing different elements of Puerto Rico’s culture. In addition, during the two week re-inauguration, Plaza showcased a sculpture collection and many cultural activities.

"I’ve been very blessed in my family, in my marriage, and with my children," Fonalledas says. "Clearly, I see my life in terms that transcend to the eternal, not only in what’s human and transitory. We are in this world with a mission. We all have talents. Those of us that have been fortunate enough to have more have a responsibility. We have to be generous with what we’ve been given."

Asked what has been the key to a successful generational transition in the Fonalledas family business, when similar local fortunes have been scattered or dissolved, he is careful and tactful.

"The process of passing a business from one generation to another is extremely difficult. Not only does one have to harmonize the tastes and talents of different individuals of diverse generations, but also the business itself is already subjected to generational market changes, which adds another changing element. Both of these ingredients have to coincide [for the transition to succeed]."

"I’m not educating or requiring my children to think they will be my successors in the business. What Zory and I give our children are the tools for them to be able to maximize their talents and opportunities. And that’s what we desire in collective terms for all children in Puerto Rico."

"If everything falls into place, I will feel very proud to see my children follow their path and evolve," he says "But people are responsible for their own lives and each one will pursue their own future. There is no established rule that applies to everyone. Each person has to make his or her decisions."

And Fonalledas has been happy with his, "My life has given me many headaches, but many satisfactions as well."


Other Business With Jaime Fonalledas Jr.


Although the Plaza Las Americas expansion has ended, Jaime Fonalledas still has his plate full.

As reported in CARIBBEAN BUSINESS (CB Dec. 7) Empresas Fonalledas is slated to invest over $75 million in various real estate projects. Next year, construction is scheduled to start on a residential project in Ponce. At a $15 million investment, the project will feature 132 walk-up units with direct access to Plaza Las Americas sister mall Plaza Del Caribe. Also slated to start construction early next year, are two residential buildings with 58 apartments each, at a total investment of $25 million, to be located behind Clinica Las Americas in Hato Rey. The company’s $32 million office-building Torre Chardon in Hato Rey–to be the new home of Empresas Fonalledas–will be ready next spring.

Slated to start next year is Comunidad Monterey in Vega Alta, an ambitious project that includes construction of 4,766 residences, 1.67 million square feet of commercial area, and more than 200,000 square feet of office space.

Also in plans is a move for Vaqueria Tres Monjitas. "We are very carefully examining the possibility of relocating it [Vaqueria Tres Monjitas] to an area in Dorado, where we already have all permits to construct a modern, and efficient plant to fill the niche," Fonalledas says. "We are waiting on the new administration–the new Secretaries of Agriculture and Treasury–on their reception of this project in order to proceed."

Fonalledas is a complete supporter of potential success of the local agriculture industry, one he truly believes in. "I say agriculture is the best school. There is no harder business than agriculture. But there is also no business that gives so much personal satisfaction," he tells CARIBBEAN BUSINESS.

"Agriculture needs special support. In all countries where agriculture is prosperous, its government and leaders recognize that fact. Like any other industry, we face a changing marketplace. Without a direct attention from the government in some subsidized structure –agriculture can’t succeed."

He calls for government intervention. "Agencies need to be aware of the need for managerial and technological support to bring efficiency to today’s industry
to produce the product that consumers demand," he continued.

"To apply it to our situation, we were looking to invest some $75 million to build a new milk plant in Dorado and I found that there wasn’t any support from the outgoing administration to provide tax credits to build the plant," he continued.

"Why couldn’t these tax credits be approved like they were for other industries like tourism? Simply because there wasn’t the support or the vision to sell the importance of agriculture–the ugly duckling of Puerto Rico’s economy–which deserves treatment equal to manufacturing and in tourism sectors."

"Agriculture has been evolving worldwide. We need a proactive presence, an equivalent to Puerto Rico Industrial Development Co. If the new administration has this vision I am firmly convinced the agricultural industry in Puerto Rico will have a great future," he said.

This Caribbean Business article appears courtesy of Casiano Communications.
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