Thanks to its good weather, affordable cost of living, skilled workforce, and strategic location, Florida is an attractive business destination for companies looking to establish their presence in the United States or expand into foreign markets. The Sunshine State has a favorable business climate that is supported by excellent infrastructure and low taxes. In May 2015, Florida was listed as the second best place for business in the US. These factors have contributed to making Florida the 4th largest economy in the United States and a highly sought-after real estate location.
The most important hotspots for commercial real estate in Florida are Miami, Orlando, and Jacksonville. In Miami, the office market is robust and has benefited greatly from declining unemployment rates, which were down to 5.5 per cent during the first quarter of 2015. Demand outstrips supply in Miami's CBD, where rental values have risen to $44.18 / sq ft. Over the past year, overall vacancy rates have decreased by 1 percentage point and currently average 14.4 per cent. Most of the office floorspace available consists of Class B space in areas like Biscayne, Miami Lakes, Central Dade, and Miami's airport, whereas availability is scarce in Coral Way, South Miami, and Coconut Grove.
Office properties in Orlando continue to be in high demand, causing a limited supply of Class A space, which is now priced at $19.54 / sq ft. Vacancy levels have gone down to 13 per cent, although they are much lower in East Orange and southwest Orlando. Direct asking prices average $22.83 / sq ft in the CBD, $20.6 in southwest Orlando, and $23.70 in East Orange.
A report published by Colliers International highlighted the substantial improvements that have taken place in the Jacksonville commercial real estate market. In just two years, Jacksonville has gone from being ranked 133rd out of 200 national property markets to being the 64th best real estate market in the country. Vacancy rates for office properties are at their lowest since 2006, and currently average 11.4 per cent. Rental rate values and the number of speculative developments are also on the rise. Rents average $19.16 / sq ft in the CBD and $17.59 for suburban offices.
Click here for office space in Miami, Orlando and Tampa.
The retail real estate market is particularly buoyant in and around Orlando, due to the city's long-standing history as a global leisure and entertainment center. According to the regional Colliers International office, retail vacancy rates in Orlando were just above 7 per cent during the first quarter of 2015. High demand has driven rental rates to $14.26 / sq ft, and more than 400,000 square feet of retail space are under development. Rents are at their highest in West Orange ($17.46), Altamonte/Longwood ($17.66), and downtown ($17.19), while the lowest priced properties are in Sanford/Lake Mary ($10.37) and Northwest Orange ($10.76).
In Miami, the retail real estate market is characterized by decreasing vacancy rates (which now average 5 per cent), and by growing interest in high-end retail developments, such as the Lincoln Road Mall or the Design District. More than 600,000 square feet of retail space will be delivered by the end of 2016.
Incentives and Programs
The state's tax structure encourages entrepreneurship and a prosperous real estate market. Several targeted industry-specific incentives and tax exemptions will be of interest to business owners or investors looking to acquire commercial real estate in Florida. Some noteworthy schemes include the following:
- Qualified Target Industry Tax Refund, also known as QTI, offers tax rebates to businesses who create high-paying jobs in high-value industries across Florida. The value of such tax refunds is capped at 25 per cent for every fiscal year. Under this scheme, additional tax refunds are available to companies that are based in brownfield areas and for companies in the export sector
- Capital Investment Tax Credits: an annual tax credit offered to companies that operate in capital- intensive sectors such as renewable energies, IT, finance, manufacturing, transportation, and biomedical technology. Tax credits are applied to corporate and income tax and can be used against the purchase and development of real estate and equipment
- Qualified Defense and Space Contractor Tax Refunds, which aim to increase the productivity of key high-tech industries in Florida and help them gain a competitive edge. This tax credit program requires that employers pay higher-than-average wages, with additional credits for those who pay wages at least 150 per cent of the median annual wage in the state. Tax credits range between $3,000 to $6,000 for each new job created or retained
- Community Contribution Tax Credits are available to Florida-based businesses undertaking approved development projects in Enterprise Zones. Credits may amount to 50 per cent of corporate, income, sales, and insurance premium taxes
Further information on industry-specific incentives can be obtained from this website.