A New Dawn For Ciudadela
–By reporter Agustín Criollo and Editor Rosario Fajardo
Editor’s note: The following article originally appeared in the August 31 print edition of Caribbean Business.
SAN JUAN — A new residential complex for older adults developed by investor Nicholas Prouty and his company, Putnam Bridge, has been announced in San Juan’s Santurce district. The “La Casa” project will be built at the exclusive Ciudadela complex in historic Santurce with a $65 million private equity investment by Putnam Bridge, a national developer of residential and commercial sites.
This is the latest project that Prouty has announced for Ciudadela, where he has already invested heavily. The development is the first aimed exclusively at people 55 years or older, he said, adding that La Casa “reaffirms our firm commitment to economic development in Puerto Rico. The project will not have debt financing. Everything will be in cash.” Prouty said he expects construction to be finished in two years.
The investor said it is imperative that economic activity be fostered with ideas that allow the island to recover, and that everyone must join forces to boost economic development.
The new complex will have 151 apartments for rent, 13,273 square feet of commercial space and 484 parking spaces. La Casa expects to become an activity hub for that population.
However, 114 of the development’s units will be exclusively for those over 55, with a monthly rent starting at $950, while the other units will be rented at the current market rate.
In addition, the building will be completely integrated with the Ciudadela community via plazas, ramps and covered exterior corridors.
La Casa, Prouty explained, complements Ciudadela, whose community mostly comprises a younger population. “Great neighborhoods are always diverse neighborhoods, and I believe in well-designed cities that are inclusive, where people from all walks of life are treated with dignity and respect,” he said.
He said that when he conceived this investment, he was surprised by seemingly unrelated problems that kept him awake at night. First, what to do with all the abandoned buildings in San Juan? Although they might seem hopeless at first glance, many of them could be easily restored with some capital and care, he said about his motivating principle to continue investing in Puerto Rico despite the island’s economic crisis.
Prouty also expressed concern about the security of elderly people in Puerto Rico and the lack of available housing and services for this age group.
He explained that there are not many developments designed for that age population in mind. On the one hand, they often do not qualify for housing under the Section 8 program, and on the other hand, luxury retirement installations are many times financially out of reach, he explained. To make matters worse, he said, some people are alone because their kids have left and often live in places “where cultural and social connections are difficult to make,” but Ciudadela has an open atmosphere in which people can connect with others.
“This [older] population requires social participation and access to services, such as health services, and this project addresses that and much more,” Prouty added.
Prouty was one of the first businesspeople to relocate to and invest in Puerto Rico, as part of the tax incentives granted in Acts 20 & 22. Aside from his ongoing investments in Ciudadela, the New Yorker acquired Fajardo’s Marina Puerto Del Rey in 2013 for $47.5 million. Upgrades at the upscale marina, reportedly $450 million, include remodeling the boating facilities and upgrading restaurants and bathrooms. The marina generates about 200 direct and 800 indirect jobs, while around 90% of contractors providing goods and services to Puerto Del Rey are local, in keeping with Prouty’s policy of giving priority to Puerto Rican businesses.
In total, Prouty and Putnam Bridge’s investments in the local economy are estimated to exceed $750 million.
The event for La Casa was attended by Gov. Ricardo Rosselló and several business and political figures, including former Gov. Carlos Romero Barceló, San Juan Mayor Carmen Yulín Cruz and Senate Minority Leader Eduardo Bhatia.
Rosselló praised Prouty’s initiative, assuring the development is evidence of a resurgence of an investment-worthy climate.
“This project is evidence there is an environment for doing business in Puerto Rico and that investor confidence is improving. This project benefits a vulnerable population while diversifying the Santurce community. I thank Nicholas Prouty for believing in Puerto Rico,” the governor said.
Eyes on Ciudadela
In 2014, Prouty outlined his plan to begin construction on the third phase of Ciudadela, a mixed-used development. The project adds to a growing list of other large-scale investments in Puerto Rico by leading investment firms such as Putnam Bridge, Paulson & Co. and the Encanto Group. Ciudadela is a $108 million endeavor that will create over 1,000 construction jobs.
When complete, the mixed-use development will include a new $7.5 million public park, 252 state-of-the-art apartments and 50,000 square feet of retail space in a beautiful area currently underutilized. The area for the new park is currently an informal parking lot that will be turned into a public park linking La Ciudadela and the nearby Museum of Art of Puerto Rico. Local community and nonprofit groups will be called upon to assist in maintaining the park.
“Ciudadela has become our flagship investment, and marks the beginning of our long-term plans for Puerto Rico,” Prouty said at the time.
Developments like Ciudadela are creating sustainable communities in Puerto Rico, with reliable public transportation and first-class amenities. The demand for these units in walkable and culturally-rich areas like Santurce is strong, Prouty indicated.
Among the businesses now at Ciudadela include a Planet Fitness gym, Yolo restaurant, Pueblo Supermarket, a Claro store, Techy’s print service, Laundry Express and Pravan Health, a medical clinic.
“You know, from the moment I saw Ciudadela, I fell in love with her—it was a visceral reaction—and I knew Ciudadela was one of those transactions that could alter my life and perspective,” he said during a 2014 Leadership Conference.
Growing elderly population
For its 2010 census, the U.S. Census Bureau reported 20.4% of Puerto Rico’s population was 60 years of age and older and the group 65 years and older was 14.5%.
By 2014, those 60 and older were estimated to be 812,000 of the local population, or 28.4% of all noninstitutionalized people 16 years and older.
This trend, which was originally attributed to lower birth rates in Puerto Rico and longer life expectancy, is expected to continue in the coming years, as the island’s lost decade and continuing fiscal and economic woes have led thousands of residents to move to the U.S. seeking better lives.
According to the Census Bureau, about 400,000 people have migrated from Puerto Rico in recent years, and many of them are younger adults with children who have favored the state of Florida as their new home.
According to José Acarón, the director of AARP Puerto Rico, as Baby Boomers—those born between 1946 and 1964—start reaching their retirement age, an increase in the number of working, independent seniors can be expected. This is despite the fact, according to the Labor Department, that in 2014 the working group of those 60 and older was estimated to be 72,000 out of a total senior population of 812,000. Within this working group, 69,000 were employed, with the balance actively seeking employment.
It should be noted, though, that the labor-force participation rate for those ages 60 to 64 was estimated at 18.8%. Within that age group, 24.3% were men. This means almost 25 of every 100 men in Puerto Rico between 60 and 64 are working beyond the common age for retirement.
Meanwhile, the labor-force participation rate for female senior citizens is higher, reported at 36.6% in 2014, corresponding with another trend of more women working than men in Puerto Rico.
“We can see the direct impact the 65-plus age segment has on Puerto Rico’s demographic profile: The island’s population is seemingly aging,” said Melanie Dederick, a client service associate at Gaither International, which conducts periodic surveys on such issues as profiles of the elderly and their behavior. “For this same reason, it’s important we evaluate this segment and its growth.”
Taking a look at the average lifestyle of older adults in Puerto Rico, Gaither said most (48%) fall in the middle-low tier, followed by 38% who fall in the low tier. Only 12% classify themselves in the Middle tier and 2% in the High-lifestyle category. Some favorite pastimes among the elderly age segment include: watching television, spending time with family, listening to music, cleaning and doing household chores, going to church and reading.
“The 65 and older age group is one to monitor, not only because of its growth, but also because its demographic profile and behavior tend to differ greatly from that of younger age segments,” Dederick said.
Considering that most elderly people categorize themselves in the middle- and low-lifestyle tiers, local businesses could attract this group by offering regular discounts or “exclusive” senior discounts on products and services, she indicated. “We have noticed an increase [in terms of] visits to businesses that offer those discounts, such as casual dining restaurants, supermarkets and fast-food establishments. By doing so, businesses may become more accessible and, therefore, more feasible to visit on a regular basis.”