From New York to San Francisco, once-gritty neighborhoods have become thriving hubs as changing tastes and demographics lure people back into the heart of U.S. cities.
Real-estate investors are trying to spur a similar transformation in a storied part of San Juan called Santurce that is scarred by decades of social upheaval and economic woe.
In the past few years, they have bought a number of properties along Ponce de León Avenue, a main artery in the Puerto Rican capital that is lined with neglected and graffiti-stained buildings. They and their allies have begun investing in amenities such as green space and additional parking.
The aim is to take advantage of Santurce’s popularity with local artists, its thriving restaurant scene and walkable streets as well as its central location nestled between major destinations like Old San Juan and the Hato Rey financial district.
“All of the elements you need for a good neighborhood were already here,” said Nicholas Prouty, an investor in distressed properties who moved to Puerto Rico from Greenwich, Conn., a few years ago.
Mr. Prouty said his firm, Putnam Bridge Funding LLC, purchased Ciudadela, an apartment complex on Ponce de León, out of bankruptcy in 2012. He is building additional apartments, retail space and parking places at the complex and plans to build a park between the complex and the nearby Museum of Art of Puerto Rico.
Another firm, Morgan Reed Group, based in Miami Beach, Fla., has purchased four largely vacant office buildings in the neighborhood within the past two years, said Brian Tenenbaum, the firm’s regional director for Puerto Rico, who described one of the buildings as a “concrete shell.” The firm is making renovations and trying to attract new tenants.
“We find the value in unattended areas,” said Mr. Tenenbaum. Morgan Reed has previously invested in downtown areas in Chicago, Cleveland and Hartford, Conn.
Santurce was once a vital area where Puerto Ricans who moved to San Juan from rural areas often settled, drawn by a network of buses and trolleys that made it a convenient place to live, said Lucilla Marvel, an urban social planner and former Santurce resident.
But it suffered as people moved out to the San Juan suburbs in the 1960s and 1970s. Census figures show that one Santurce district, Campo Alegre, had 3,355 residents in 1940 and 1,051 in 1980, according to Ms. Marvel. “The population drop was dramatic,” she said.
Parts of Santurce, including waterfront districts such as Miramar and Condado, are still densely populated and remain popular with well-heeled home buyers and visitors to Puerto Rico, which is a U.S. territory.
The area around Ponce de León, further from San Juan’s beaches and major tourist attractions, continued to struggle with abandoned buildings and street crime and has declined further as Puerto Rico wrestled with a weak economy for much of the past decade, according to people familiar with the area.
In the past few years, however, Santurce has also lured young San Juan residents drawn by relatively affordable housing, cultural destinations such as the museum and nearby art galleries, an annual street fair called Santurce Es Ley and the vibrant nightlife around La Placita, a part of Santurce that is home to restaurants run by widely acclaimed chefs.
“It’s become a hipster destination,” said Miguel Soto-Class,president of the Center for a New Economy, a San Juan think tank.
Mr. Prouty said all of the existing apartments at Ciudadela have been sold, 95% of them to Puerto Ricans, not visitors to the island, and the typical buyer is a single woman in her early 30s earning about $40,000 a year. A grocery store there sells locally grown produce, and the complex has its own security force, he said.
Apartments in the next phase of the project are expected to become available in 2017 and to sell for about $180,000 for a one-bedroom apartment and $350,000 for three bedrooms, according to Mr. Prouty.
Mr. Tenenbaum, of Morgan Reed, said that an office building on Ponce de León called Miramar Plaza was about 5% occupied when his firm became majority owner in 2014. Now, he said, occupancy is up to 50%. “We have an artisanal coffee shop coming in,” he said.
But he said another office building Morgan Reed owns nearby needs to have its electrical system replaced, and the company is still trying to lure retailers to rent space at street level. Mr. Tenenbaum said the firm is “cautious” in its plans for investing in the neighborhood because of the challenges facing Puerto Rico’s economy.
Urban revival of the kind seen in places like Brooklyn is “possible” for Santurce, said Arturo García-Solá, a corporate lawyer in San Juan who is president of the art museum’s board. He said it will require a favorable investment climate and an easier system for property owners to obtain permits.
It will also take a sustained reversal of the population flight that hurt Santurce—and that continues to plague Puerto Rico in general—said Ms. Marvel. “To bring a place back, you need to bring people back.”
Push to rebuild once-vital part of San Juan gains steamBy Liam Pleven
Investors Hope for Revival in Puerto Rico’s Santurce Area
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