The Mall of San Juan, in Puerto Rico’s capital, opened to great fanfare in 2015.
But the last five years haven’t been kind to the $475 million upscale shopping center, which has grappled with retail bankruptcies, natural disasters and the coronavirus pandemic.
Today more than a third of the 631,000-square-foot mall is empty and the property will soon lose its last remaining anchor store, Nordstrom, according to Bloomberg. The mall’s rising vacancy and mounting financial troubles are the result of bad luck, bad timing, and possibly overoptimism on the part of developer Taubman Centers.
While roughly half of Puerto Rico’s population lives below the property line, Taubman COO Bill Taubman said the company’s research pre-development “showed substantial wealth, growth in tourism, [and] growth in the quality of tourism.”
The Puerto Rican government had recently put $3 billion toward building and remodeling hotels and was offering an attractive suite of financial incentives for outside investors.
But things started to go awry shortly after the mall opened.
The same year that Puerto Rican officials celebrated the mall’s opening, Gov. Alejandro Padilla acknowledged the territory was insolvent. Two years later in 2017, Puerto Rico filed the largest municipal bankruptcy in U.S. history, according to Bloomberg.
Hurricane Maria devastated the island that fall and forced some stores in the Mall of San Juan to close for more than a year. The pandemic then forced the mall to shut its doors for 76 days earlier this year.
“They were betting on tourists, they were betting on high-income individuals,” said University of Puerto Rico economist Jose Caraballo-Cueto. “[The pandemic] was the last punch that they needed to be knocked out.”
Taubman Centers, which didn’t elaborate on plans to turn the property around, said that other department stores or entertainment venues might be interested in renting space. [Bloomberg] — Dennis Lynch