Although, not as great as it has been in previous years, the overall commercial real estate market in Florida remains strong. Today, the commercial market is considerably better than the past few years. Malls are now undergoing transformations, Commercial parks are growing and excess office space in Florida is starting to dwindle. There are plenty of options available from offices spaces to large industrial structures. There is a strong supply of commercial real estate, retail and office space.
The office market in Florida continues to display glimmers of hopefulness compared to the past several years. For 2010, the theme concentrated on renewals, tenant upgrading to nicer locations or moving to reduce their overhead costs. The year closed with a net absorption of – 323, 420 SF, which is an improvement from the recorded negative absorption of 5.5 MSF in 2009.
The overall office market vacancy stood at 21.1 percent. This is due largely to the fact that the Miami office market added 1.5 million square feet to the market and currently stands at over 50 percent vacant. These vacancy figures represent sublease space vacated due to either business closure or office space that was given back by businesses adjusting to lower space requirements. Opportunities to sublet remain a viable option for tenants considering alternatives to save money.
Currently there is 2.2 million square feet of sublease space available on the market with the majority in the Orlando, Palm Beach and Tampa Bay area. When you take away this space the direct vacancy stood at 20 percent in Florida.
Entering 2011, over 1 million square feet of space remains under construction. Nine new buildings, that are scheduled to be completed in 2011, account for this new development with over 20 percent of the space already leased. It is anticipated that vacancy will stabilize and even decrease in most Florida markets due to controlled development and increased activity.
The office rental rates throughout 2010 have held steady. The average direct asking rates are $23.60 FSG. In South Florida, the standard asking rates are elevated averaging approximately $28.35 PSF. These rates do not reflect concessions that landlords offer to retain and attract new tenants such as tenant improvement allowances, free rent and deeply discounted rates.
In the investment market, there were several fourth quarter sales in 2010. Statewide there has been over 120 office buildings sold totalling over 10 million square feet. Exceeding a combined volume of $1.6 billion with an overall asking rate $164 PSF. Commanding most of the attention is stabilized core assets with high occupancy rates with troubled assets coming in second. The overall cap rate in the state of Florida is 7.9 percent, but varies greatly by property class and market.
There are numerous advantages and incentives available to assist companies in the state of Florida including inducement programs, tax incentives, financial support services and small business assistance. Additionally, Florida offers tax credits, refunds and other incentives to promote business development and to create jobs. Incentives are tailored to assist individual companies at the state and local levels. Incentives include lease payments may be deductible as operating expenses and tax credits that the lesser takes may be passed down to the lessee in the form of reduced rent. It may be possible to negotiate a lower price for the lease.
A program to encourage economic growth in distressed areas offers tax advantages. Tax refunds and credits are available under this program. In addition there are several tax advantages for businesses, such as corporate tax incentives, and sales tax incentives and use tax incentives and insurance premium tax and fees incentives, as well as other incentives such as flexible lease options. Many cities in the state of Florida also have Rent Incentive Programs in place to assist startup businesses during the vital first year of operation. These programs may provide a portion of the rent during the first year of business. Miami has an aggressive property tax incentive in order to cultivate an environment where businesses thrive.
The state of Florida holds numerous optimistic attributes for both landlords and tenants. The state holds natural qualities that are extremely favorable to businesses. Florida has a business friendly tax composition. Florida harbors an exclusive market filled with plenty of prospects and a large potential for profit.
Market View State of Florida www.cbbre.net/research
Enterprise Florida http://www.eflorida.com/Why_Florida.aspx?id=472