Florida Commercial Real Estate Market Trends Analysis

Industrial buildings are a type of commercial real estate that is used by businesses that serve other companies (B2B tenants). Industrial tenants may be manufacturers and middlemen like supply houses.

Recently an additional class of industrial renters has been developed by fulfillment centers that deliver online orders to retail purchasers.

Industrial properties are long-term hold investments that are wanted by investors/landlords. Their profitably projections include lease income and asset value growth. Industrial leases can be based on either gross or net rent conditions.

Annual and 10 Year Population Growth

Industrial property investors have a need for accurate population data that is specific to their category of property investment. They don’t lease to the public, but they need to uncover a growing amount of taxpayers in the area. Industrial investors want to know that the region’s infrastructure is adequate and adequately managed.

All property values, commercial as well as residential, are weakened in markets that are losing citizens. A large concern for industrial tenants is the access to desirable workers. These renters won’t be comfortable gambling on a place that doesn’t provide a growing number of potential workers.

Property Tax Rates

Real estate taxes are the same economic signal for industrial property investors as they are for apartment complex investors. Unstable tax rates reveal a market that probably isn’t beneficial for your investment’s profitability.

We have informative resources on commercial and industrial real estate taxation and how to reduce commercial property tax in the U.S. to help investors get informed about this topic more deeply.

Accessibility

Companies that lease industrial properties haul large products or big amounts of them. Tractor-trailer trucks are typically utilized to do this. Industrial real estate investors hunt for assets that are near main highways that big tractor-trailer trucks can get to conveniently.

There are industrial companies that use trains or airplanes to transfer their goods. Industrial properties that are placed adjacent to an interstate make this easier, which makes the property more valuable.

Utilities

Manufacturing companies typically utilize significant amounts of power and water. If an industrial building does not possess adequate utilities, it will limit the kinds of renters that will rent there.

Companies that are housed in retail premises sell directly to the people in the market. Those properties may house one renter (single-tenant) or a few renters (multi-tenant). Retail companies that have to be alone encompass banks, drug stores, dining establishments, or auto parts centers.

A building that houses a couple or more businesses is classified as multi-tenant property, as are “neighborhood” shopping centers, “strip” malls, grocery anchored shopping, or malls with large national stores considered “big box” centers. “Lifestyle” retail shopping centers can incorporate retail, office, and residential units.

Retail landlords utilize “net” contracts that obligate the renters to separately take care of the property’s taxes, insurance, and upkeep of the common areas like the parking areas. Net lease agreements additionally specify that the tenant is responsible for the upkeep of the property.

Retail renters have specific location requirements that retail investors follow when analyzing demographic data.

Population Growth

Retail investors do not only review the total area’s populace and growth. Investors also look at the area’s submarkets. Retailers have to locate where their clients live, commute past, or are employed.

Population improvement is important, but retailers require a minimum amount of clients at this time. Retail renters, and therefore retail landlords will analyze all populace information including size, growth, and daytime population.

Median Income

The populace’s wage standards are a significant component of retail site requirements. High-end goods require clients with big incomes while lower end products need lower income households.

Median Age

Age information is more useful to retail investors than alternative investor categories. Depending on the kind of shopping center (grocery anchored, entertainment anchored, big box retailers) the age of the populace could entice desirable retail tenants.

Property Tax Rates

Retail real estate buyers use property tax rates the identical way as both apartment building and industrial investors. Increasing taxes are passed on to their renters which lowers their occupancy rates, and the value of their property could be lessened over time.

In a region showing high property tax rates, it’s even more crucial to check if your property isn’t overvalued by the government. Protesting property taxes can be delegated to the best commercial real estate lawyers in Florida.

Office space is leased to companies that look for a place for their employees to work. Office units might be large enough for one employee or tens of employees. For many major companies, renting office space allows them to utilize their capital for the growth of their company.

Office renters sign a “full service” lease which is also considered a gross lease. The rent incorporates the landlord’s anticipated costs for utilities, real estate taxes, insurance, and maintenance. The details can be updated depending on the tenant and landlord’s requirements.

Office property investors hold these properties for a long term which gives income from both repeating rental income and the increasing worth of the property.

Population

The populace demographic data that office building investors hunt for should show a good number of employees for office renters. This often involves the total residents living there, their education, and median age. In order to lease to dependable tenants, landlords have to mirror the lessees’ requirements in their site conditions.

Property Tax Rates

A properly managed city or county that attracts potential office workers to the area won’t have high or constantly rising tax rates. Desirable renters for your property will consider this statistic and so should you.

Incomes/Cost of Living

Office lessees see existing wage standards as one indication of the quality of the labor pool. It also gives them an idea of the salary standards needed to compete for the optimum employees.

Education

Office owners understand that the education level of the workforce will be vital to their possible renters. A call center might not need college graduates, but a law services company could.

When an investor buys real estate, rehabs it, leases it, refinances the asset, and then repeats the process, it’s designated a BRRRR category of investment. It’s a category of Buy and Hold investment where an income generating property is kept for a long period. This method has the benefit of providing short-term (lease) income and net income from the long-term increase in value.

Initially the investor acquires a property, then they fix it up and secure a tenant. Next, the asset is refinanced based on its increased worth, and the additional value is provided to the investor. This becomes the down payment on their next investment, and they repeat it all again.

It’s hardly possible to take a traditional commercial mortgage for a building in need of a considerable renovation. Banks and other traditional lending firms won’t serve this kind of deals taking into account a higher risk.

Our directory of commercial real estate service providers can shorten your way to the top Florida commercial private and hard money lending companies and the best commercial rehab lenders in Florida.

From one of the best commercial real estate agents in Florida, you can get an expert opinion on the benefits and drawbacks of the community for your project. Read on to understand what indicators you should discuss with them.

Median Gross Rents

Investors have to realize the amount of rent they can charge and if it is likely that rents will increase later. This one factor means a lot when the final market decision is made.

Property Value Growth

Buy and hold investments clearly need properties that are likely to increase in worth.

Population

The pace of the population’s increase is a crucial number to BRRRR investors. Absent an increasing populace, rental units will remain unoccupied and depreciate.

Income

To invest in the correct investment real estate, investors should be aware of their target renters’ amount of income. An asset that doesn’t provide the needs of the market will have a high vacancy rate.

Property Tax Rates

High or increasing taxes will harm an investment. Stable tax rates are a signal of a vibrant, improving economy.

Note that the Government’s estimates of property values are often inaccurate, which makes you pay unfair tax amounts without knowing. To win a tax protest process, talk to the best commercial property tax consultants in Florida and top Florida commercial real estate valuation companies.

To a real estate investor, property development refers to the creation of any commercial property or a complete residential community. A developer seeks and purchases usable property and creates either parcels for purchase or buildings that are leased to renters.

This requires suitable zoning, site work plans by civil engineers, construction plans for buildings, and the okay from the local authorities. After all the submissions are authorized, the site work and construction are completed and purchasers or tenants are located.

It could take a year or more from the beginning to completion of a development venture. During that time, economic and legislative changes could impact the project’s profitability. That is why the most financially dangerous category of real estate investment is development.

A project may be stopped by different events that cause a considerable delay before renewing development. Even if the site is secured against vandals, nobody can prevent natural disasters from damaging the unfinished property. However, you can use the best commercial real estate insurance firms in Florida to ensure that you are refunded with a reasonable compensation in this case.

Insurance is a service you may need to present to lenders while getting approved for financing. You can learn about the insurers that are considered good by asking the best commercial construction real estate lending companies in Florida directly.

Population

Property developers use the same demographic statistics that their possible buyers and tenants estimate to find neighborhoods with suitable levels of populace size and growth, economic viability, and educational levels.

Income

Retail real estate developers assess income levels to place their development where it would draw the customers that their intended renters need. Premium retail stores look for higher income regions, but lower priced retail stores need middle class customers.

Office and industrial tenants will need to discover the pay rates that their possible workforce will want. Those developers analyze income data as one sign of a site’s potential for profitability.

Education

Industrial and office property tenants want distinct achievements of education in the market’s populace. Many office tenants require college grads for their workforce. Industrial employees don’t want more than high school grads.

Age

Developers look for a median age that reflects citizens who are active employees and taxpayers. These are the workers that office and industrial tenants need to access. Citizens who are still employed usually shop and eat out repeatedly at retail businesses.

A working age populace also has the most dynamic residential buyers that residential investors have to have.

Investing in promissory notes means paying a lower amount than the payoff balance for a loan that’s in effect so that the note purchaser becomes the lender. The original lender may be willing to sell because they want money, or because the borrower is behind in their payments.

One mortgage note investment plan is to create a revised loan payment program that is more convenient for the borrower to meet, and retain the investment in their portfolio long-term. They know that if the borrower discontinues making payments, they can recover the collateral and unload it, which is a feature of the strategy.

Population

One of the most fundamental factors in real estate investing of all strategies is the magnitude of the market’s populace and whether it is expanding. Investors understand right away if an area is feasible by analyzing population data.

Property Values

A mortgage note investor wants to see that property values in the market are increasing. The growing worth of the collateral mitigates the exposure of the investment.

Property Tax Rates

When property taxes rise on a regular basis, borrowers who have trouble making their debt payments will find it hard to stay current. This is not good for long-term investors, but good for those who want to turn their investment around quickly by way of a sale of the collateral property.

Real estate investment trusts (referred to as REITs) are investment entities that purchase and supervise income generating real properties. Their revenue is derived from lease payments and the occasional liquidation of assets.

REITs are obligated to distribute ninety percent of their profits in dividends which appeals to many investors. The capability to get their cash out by selling their REIT shares appeals to small investors.

REIT investors are considered passive investors which dictates that they have nothing to do with the acquisition or oversight of any assets.

Property owners wanting to become passive investors consider buying REIT shares. They invest in REIT shares once they liquidate real estate.

A tax deferred exchange is meant to save money for investors who have this plan in mind. Learn details about it from our guides: Can You Do a 1031 Exchange into a REIT? and What Is a DST 1031 Exchange?.

IRS requires that you use assistance from a 1031 Exchange facilitator to consider the transaction rightful. Our directory lists the best 1031 exchange companies in Florida to narrow down your search.

Another way that funding is pooled for real estate investments is a real estate investment fund. Funds do not hold real estate — they own interest in ventures that do, for example REITs.

Unlike REITS, funds aren’t obligated to disburse dividends. Like with regular stock funds, the return is created by growth in the value of their stock.

Mutual funds, ETFs (exchange-traded funds), and high-end private equity funds are designated as real estate investment funds. Shares in investment funds are bought and sold on the public market which is helpful for beginner investors.

Fund investors don’t have anything to do with choosing assets or markets, meaning they are passive investors.