The two-story living wall in the atrium at Tantalo in Panama City teems with 983 plants.New lodging and restaurants are inspiring travelers to choose Casco Viejo, a historical area in Panama City, as their base for exploring Panama and its famous canal. Locals also call the district Casco Antiquo or simply Casco.

Declared a Unesco World Heritage Site in 1997, Casco Viejo's historical structures include the Presidential Palace, the National Cathedral and the San Jose Church with its golden altar.

New businesses in buildings with restored facades help maintain Casco's colonial Spanish feel. Coffeehouses and cafes such as Super Gourmet sell sandwiches, salads, vitamins and holistic remedies along with a cup of joe.

Beautiful street art and graffiti adorn many walls and garbage cans. A few squatters remain from the 1970s, when Panamanian dictator Manuel Noriega let families put down roots and live rent-free. But they are friendly and lend an air of authenticity to Casco Viejo not found in shiny, but culturally sterile, tourist locales.

'A rumble of creativity'

Matthew Blesso, founder and CEO of Blesso Properties, an art- and eco-oriented New York real estate firm, created Tantalo Hotel, Kitchen and Roofbar in Casco Viejo because the area was the only truly pedestrian-friendly district in Panama City.

While on a scouting trip, "I saw some of the people visiting and living there and discovered a burgeoning art scene," Blesso said. "I saw a rumble of creativity."

The boutique, 12-room Tantalo Hotel, filled with art created by local and international artists using repurposed materials, opened in March 2012. Locals and visitors have begun coming to Casco Viejo specifically to dine in Tantalo's Kitchen or have cocktails at Encima, Tantalo's rooftop bar.

Wood from the Panama Canal has been upcycled into the floor of Encima. The cocktail tables in the bar area of Tantalo Kitchen, the hotel's ground-floor restaurant, were created from vintage suitcases.

Rates, commissionable at 10%, start at $129 per night plus tax, breakfast included. See www.tantalohotel.com.

Coffee and culture

Rich Sherman also saw potential in Casco Viejo.

It "has the history and culture of Panama that we greatly appreciate," said Sherman, who opened the Casa Sucre Boutique Hotel and Coffeehouse with his wife, Alyce, in 2009. "Renovating an 1873 historic building offered us an opportunity to contribute to the restoration of Casco Viejo."

Across the street from the Tantalo Hotel, Casa Sucre has five guestrooms and three apartments in addition to the coffeehouse.

Rates, commissionable at 10%, start at $145 per night for a room, $160 per night for an apartment, plus taxes; breakfast for two is included. See www.casasucreboutiquehotel.com.

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