Tag: investment

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Florida’s Commercial Rent Tax Repeal: What It Means for Tenants and Landlords

Sources:

https://www.gulfshorebusiness.com/florida-business-rent-tax-ends

https://www.trepp.com/trepptalk/florida-eliminates-its-commercial-rent-tax-what-next

A Landmark Change in Florida Commercial Real Estate

Florida’s long-standing commercial rent tax will soon be history. With the passage of House Bill 7031, signed by Governor Ron DeSantis, the statewide 2% sales tax on commercial lease payments—and related local surtaxes—will be eliminated effective October 1, 2025. This move ends Florida’s unique position as the only U.S. state to levy a statewide sales tax on commercial rent, representing a major policy shift that will reshape the economics of leasing across the state.

The History of the Commercial Rent Tax

The commercial lease tax was introduced in 1969 and, at its peak, reached 6%. Over the decades, it was gradually reduced, reaching 2% by mid-2024. For years, business leaders and real estate professionals argued that the tax increased occupancy costs and placed Florida at a competitive disadvantage compared to other states. The repeal represents a significant pro-business measure, with the state projecting annual savings of nearly $1 billion for commercial tenants.

How Tenants Will Benefit

For tenants, the financial impact will be immediate and substantial. A company paying $100,000 in monthly rent will save approximately $24,000 annually once the repeal takes effect. These savings can be redirected toward reinvestment in operations, business expansion, or workforce growth. By lowering the cost of occupancy, the repeal is also expected to attract new businesses to Florida, particularly those that previously viewed the state’s tax structure as a barrier to entry.

What It Means for Landlords

Landlords will also see benefits from the repeal, particularly in the form of reduced administrative burdens. Once the tax is removed, there will be no need to calculate, collect, and remit sales tax on rent. In high-demand submarkets, some landlords may adjust base rental rates to capture a portion of the savings, while in more competitive markets, tenants are likely to retain the full benefit. The elimination of the tax is also expected to stimulate leasing activity, which could help strengthen property values across office, retail, and industrial sectors.

Preparing for the Transition

Both tenants and landlords should take time before October 1, 2025, to review their lease agreements and operational processes. Tenants should ensure that rent invoices dated after this date no longer include the tax, and they should consider using the projected savings as leverage during renewal or expansion negotiations. Landlords should update their accounting systems to reflect the change, make any final tax filings for rent due prior to October 1, and communicate the details of the repeal to their tenants in advance to avoid confusion.

Exceptions to the Repeal

While the repeal is broad in scope, certain types of rental transactions will remain taxable. These include transient accommodations of less than six months, parking and storage rentals, boat docking arrangements, aircraft tie-downs, and equipment rentals. Additionally, any rent that is due before October 1, 2025, will still be subject to the tax, even if the payment is made after that date.

The Bottom Line

The elimination of Florida’s commercial rent tax is a significant milestone for the state’s commercial real estate industry. Tenants will enjoy meaningful cost reductions, landlords will benefit from operational efficiencies, and the overall leasing environment will become more competitive. At Cohen Commercial Realty, we are ready to guide clients through this transition, ensuring they are positioned to take full advantage of the opportunities created by this historic policy change.

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The Urban Shift: What Florida’s Booming Downtowns Mean for Commercial Real Estate

South Florida’s urban cores—Miami, Fort Lauderdale, and Delray Beach—are in the midst of a commercial and cultural transformation. No longer defined solely by tourism or beachfront living, these city centers are evolving into economic powerhouses that attract business, talent, and capital. At Cohen Commercial, we help clients navigate this shift with insight, strategy, and regional expertise rooted in the realities of South Florida’s dynamic markets.

Miami: Skyrocketing Growth & Global Positioning

Downtown Miami has emerged as one of the nation’s fastest-growing urban hubs. In 2024 alone, more than 11,300 residential units were initiated—surpassing 2023 figures and reinforcing the city’s continued upward trajectory. Over half of all new residential construction in Florida is now happening in downtown Miami, and most of it is luxury-focused.

This boom isn’t limited to housing. Miami is rapidly becoming a global business capital, drawing in corporate headquarters, financial firms, and high-net-worth individuals from across the U.S. and Latin America. In 2023, exports from the Miami region reached nearly $140 billion, as Brickell and nearby districts gained traction as headquarters locations for multinational companies.

Transit-oriented developments like MiamiCentral—which integrates Brightline and Tri-Rail connectivity with residential, retail, and office space—are helping to reshape how people live and work downtown. With direct access to both regional and intercity transportation, properties near these nodes are seeing major value appreciation.

Fort Lauderdale: Stabilizing for Long-Term Strength

Downtown Fort Lauderdale, once on a rapid construction sprint, is now entering a more stable phase of growth. While development activity has cooled compared to previous years, this deceleration provides space for strategic reevaluation and improved urban planning.

Major transit infrastructure investments—most notably the PREMO Light Rail project, part of Broward County’s $4.4 billion mobility initiative—are set to boost connectivity between downtown, the airport, and Port Everglades by the end of the decade. This future-forward approach to infrastructure is expected to enhance downtown’s appeal and unlock new development potential along the planned transit corridor.

Delray Beach: Smart Growth Through Mixed-Use Vision

Delray Beach continues to thrive by balancing charm with innovation. The Atlantic Crossing development—slated for completion in 2025—is a defining project for the downtown area. It spans 9.2 acres and includes a vibrant mix of office, residential, retail, and structured parking, all integrated within the walkable heart of the city.

Unlike the high-density push seen in Miami, Delray is taking a more curated approach. Downtown continues to attract a steady stream of foot traffic, entrepreneurs, and residents drawn to its human-scale development and small-business-friendly environment. This measured strategy positions Delray Beach as one of South Florida’s most attractive emerging commercial destinations.

Key Drivers Behind South Florida’s Urban Shift

Several major forces are shaping the evolution of South Florida’s downtown real estate landscape. Transit-oriented development continues to be a major catalyst for growth, particularly around Brightline stations in Miami, Fort Lauderdale, and Boca Raton. These areas have seen significant appreciation—home sales near Miami’s station, for example, rose 32%, while property values surged 131% since 2018. At the same time, Miami’s construction boom remains heavily weighted toward luxury residential inventory, shifting the downtown demographic and creating ripple effects across retail, hospitality, and office sectors. Meanwhile, Fort Lauderdale is embracing a more measured development pace, focusing on aligning future growth with infrastructure investments like the PREMO Light Rail initiative. Together, these trends reflect a region in transition—one that rewards thoughtful, localized strategy.

How Cohen Commercial Delivers Value

Cohen Commercial brings unmatched insight into South Florida’s most complex and competitive real estate environments. Whether it’s supporting lease-up strategies in Delray Beach, structuring transit-oriented investments in Miami, or helping businesses secure strategic downtown locations in Fort Lauderdale, we deliver tailored, informed solutions.

South Florida’s downtowns are no longer just growing—they’re evolving. Understanding how to succeed in these environments means understanding how infrastructure, population movement, and business incentives intersect. That’s where we come in.

Sources:

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Boca Raton’s Times Square Billboard: A Commercial Real Estate Play

On July 24, 2025, the Sun Sentinel reported that the City of Boca Raton launched a $70,000 digital billboard campaign in the heart of Times Square, New York. The aim? To attract businesses and executives weary of the Northeast’s high taxes, cold winters, and dense urban grind. From a commercial real estate perspective, this isn’t just a flashy marketing stunt—it’s a calculated investment in demand generation and long-term value creation.

By placing the advertisement squarely in front of thousands of daily decision-makers in Times Square, Boca is targeting the very audience that might be exploring secondary offices, satellite hubs, or full-scale relocations. The messaging aligns with current post-pandemic trends: companies are reconsidering their urban footprints and increasingly looking toward the Sun Belt for operational efficiency and talent-friendly climates. This ad positions Boca as a high-quality, accessible, and lifestyle-forward destination that can meet those evolving business needs.

The implications for commercial real estate in Boca Raton are significant. A successful campaign could drive increased demand for office parks, flex industrial space, co-working infrastructure, and even mixed-use development projects. For landlords and developers, this marketing effort serves as a tailwind that can bolster lease negotiations, stabilize occupancy levels, and justify stronger rental terms. Should enough interest convert into tangible relocations, commercial properties in the area could see a marked uptick in leasing velocity and long-term tenant commitments.

The billboard also reflects a broader strategy of economic positioning. By making a visible play in one of the world’s most high-profile advertising corridors, Boca is signaling that it’s open for business—and serious about attracting out-of-state capital. But with that visibility comes responsibility: the city will need to ensure infrastructure keeps pace with potential growth. That includes investments in public transportation, high-speed internet, and workforce housing that can support the growing needs of transplanted firms and their employees.

From a financial standpoint, the $70,000 expenditure represents a small bet with potentially large returns. If even one midsize firm relocates and leases 50,000 to 100,000 square feet of office or industrial space, the tax base and leasing revenue generated could more than compensate for the original outlay. This is classic municipal venture capital at work—small-scale public investment aimed at long-term economic development.

There are also broader implications for Boca’s positioning in the regional competitive landscape. Cities across Florida—including Miami, West Palm Beach, and Fort Lauderdale—are all vying for the same relocating companies. Boca’s campaign helps differentiate it by projecting ambition and forward-thinking in a crowded field. It’s a message not just to New Yorkers, but to other Sun Belt cities as well: Boca Raton is not sitting back—it’s stepping forward.

Going forward, the success of the campaign will depend on measurable outcomes. Are New York-based companies inquiring about site visits? Are brokers fielding new calls tied to the ad? Will Boca’s economic development office share lead data or conversion metrics? These are the questions commercial real estate stakeholders should ask in the coming months. Additionally, if the campaign proves fruitful, the city may scale its marketing push to other regions or refine its messaging to target specific industries like fintech, logistics, or healthcare services.

Ultimately, Boca Raton’s Times Square billboard isn’t just a splashy piece of marketing—it’s a strategic maneuver designed to reframe the city’s role in the national economic conversation. For brokers, developers, investors, and tenants, it’s a signal worth watching. The CRE community should keep a close eye on how this campaign shapes leasing activity, asset values, and urban development over the next year. The success or failure of this initiative could serve as a blueprint—or a cautionary tale—for how smaller markets can use bold, targeted marketing to influence commercial real estate flows in a post-pandemic world.

https://www.sun-sentinel.com/2025/07/24/boca-raton-spent-70000-on-times-square-advertisement-to-lure-new-york-businesses/

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How We Use Buildout to Broker Like a Boss

At Cohen Commercial, we don’t just facilitate transactions—we position properties, build brand value, and broker with intention. In a competitive commercial real estate landscape, speed and consistency matter just as much as the deal itself. That’s where Buildout comes in. It’s more than just a marketing platform—it’s a toolkit that allows us to deliver excellence, stay organized, and present listings in a way that reflects our brand’s caliber. From listing presentations to offering memorandums, Buildout helps us operate with precision and professionalism.

Custom Templates Create Consistency

From the first impression to the final document, consistency is everything. Buildout lets us take default templates and refine them to reflect the exact voice and style of Cohen Commercial. Our cover pages, internal layouts, and data presentations have all been carefully adapted to match our brand standards. This isn’t just about looking good—it’s about building trust. Clients expect a polished experience, and with our templates customized through Showcase+, every single asset we produce reinforces the value and professionalism they can expect from us.

Streamlined Marketing from Listing to Close

Buildout doesn’t just help us create documents—it powers our full marketing engine. As soon as a listing is live, we can generate a fully branded website and deploy targeted email campaigns directly through the platform. There’s no need to juggle multiple tools or designers. Buildout helps us move faster, maintain quality, and keep everything centralized. And when it’s time to share materials with potential buyers or brokers, we can control access at multiple levels, ensuring the right people see the right documents at the right time. That seamless experience helps us move from lead to close with efficiency—and confidence.

A Platform That Tells a Better Story

In commercial real estate, storytelling matters. Buildout enables us to tell compelling, visually rich stories with every listing. Through customized maps, multimedia integrations like aerial drone footage or virtual tours, and on-brand design, our materials don’t just inform—they persuade. Whether it’s an institutional investor reviewing an offering memorandum or a local tenant looking at a property website, the message is clear: we are professionals who know the market, and we know how to position properties to win.

Why We Broker Like Bosses

Buildout gives us the tools to do what we do best—faster, smarter, and with more impact. Our team spends less time formatting and more time closing. Clients get high-quality materials that inspire confidence. And our brand stays strong and consistent, no matter how many listings we’re managing. Buildout doesn’t just support our workflow—it elevates our entire brokerage strategy.

At Cohen Commercial, brokering like a boss means being efficient, consistent, and bold in presentation. Thanks to Buildout, we do all of that—and more—every single day.

https://www.buildout.com/blog-posts/beyond-basic-elevate-your-brand-with-showcase-customization-tools

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Palm Beach’s Sole Gas Station Sells for $11.94M — A Testament to High-Value Commercial Real Estate

In the world of commercial real estate, location and uniqueness often drive value — and there’s no better example than the recent $11.94 million sale of Gray’s Sunoco, the only gas station on the island of Palm Beach. This record-setting transaction reflects the scarcity and desirability of commercial properties in affluent markets.

A One-of-a-Kind Commercial Asset

Situated at 340 S. County Road, near Palm Beach Town Hall, Gray’s Sunoco has long been more than just a gas station. With its full-service pumps and ability to service high-end vehicles like Rolls-Royces and Ferraris, it serves as both a community staple and a critical service point in times of need — particularly during hurricane season when fuel supplies run low.

The property, which includes four service bays and a small convenience store, sits on just four-tenths of an acre. Yet, its small footprint didn’t stop it from commanding a premium price — a hallmark of high-value commercial real estate in exclusive markets.

From $2.6M to $11.94M in Two Decades

The seller, Peter Berley, acquired the property in 2005 for $2.6 million. After 20 years of ownership, the recent sale represents a nearly fivefold increase in value, reflecting Palm Beach’s booming real estate market and the rising importance of essential-use properties.

The buyer, Alexander Hufty Griswold, is a well-known Palm Beach real estate investor with deep family roots in the area. Through a Delaware-registered LLC linked to his Armata Holdings Management Corp., Griswold secured the property with the intention of maintaining its current use.

Why This Sale Matters

This transaction highlights several key trends in commercial real estate:

• Scarcity Drives Value: As the only gas station in Palm Beach, Gray’s Sunoco offers a rare, irreplaceable service. In markets where land is limited and zoning is strict, unique commercial assets often appreciate faster than traditional properties.

• Community-Centric Investments: Griswold’s commitment to preserving the property as a gas station reflects a growing emphasis on investing with community impact in mind. Essential-use properties that serve local needs can maintain stable demand regardless of market cycles.

• Historical and Emotional Value: The station’s history dates back to the early 20th century, adding sentimental value to its already prime location. Properties with a legacy often command higher prices due to their cultural and historical significance.

What This Means for Commercial Real Estate Investors

The $11.94 million sale is a reminder that not all commercial real estate is created equal. In exclusive markets like Palm Beach, properties that blend necessity, scarcity, and history can achieve exceptional valuations. Investors seeking long-term appreciation should consider essential-use properties in high-demand areas where competition is low but impact is high.

As Palm Beach continues to evolve, the preservation of landmarks like Gray’s Sunoco demonstrates that commercial real estate is about more than just transactions — it’s about sustaining the fabric of the community.

At Cohen Commercial, we understand the value of unique commercial assets. Whether you’re buying, selling, or investing, we’re here to help you navigate the market with confidence.

Cited Source: Palm Beach Daily News, “Palm Beach’s Sole Gas Station, Which Offers Full-Service Pumps, Sells for $11.94M” by Darrell Hofheinz, March 20, 2025.

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Westlake’s Commercial Growth: Walmart and Lowe’s Signal Market Maturity

The city of Westlake, Palm Beach County’s newest municipality, is attracting major national retailers, with Walmart and Lowe’s set to present development plans for new locations along its commercial corridor. This expansion underscores the increasing demand for retail infrastructure driven by rapid residential growth in the western suburbs.

Westlake, developed by Minto Communities, has seen significant housing expansion, with over 3,300 residential permits issued since 2017. The area has capacity for 6,500 homes and 2.2 million square feet of commercial development. This rising population density makes it a prime target for retailers seeking to capitalize on growing consumer demand.

Strategically located on Seminole Pratt Whitney Road, the proposed Walmart and Lowe’s would be the westernmost locations for both chains in Palm Beach County. Walmart’s inclusion of fuel pumps suggests a competitive positioning against retailers like Costco. These additions are expected to serve not only Westlake but also neighboring communities such as Loxahatchee and Belle Glade.

Commercial real estate experts note that retailers follow population growth, and Westlake’s trajectory mirrors trends seen in other suburban expansions. The introduction of these big-box anchors is likely to attract additional retailers, restaurants, and service providers, enhancing the city’s economic ecosystem.

With national brands like Publix, Starbucks, and Planet Fitness already establishing a presence, Walmart and Lowe’s further solidify Westlake’s emergence as a key retail destination. Their presence is expected to boost property values, generate jobs, and support small business growth, transforming Westlake from a residential hub into a fully integrated live-work-play community.

City officials anticipate council approvals by early 2025, marking a significant milestone in Westlake’s commercial development.

Sources:

https://www.palmbeachpost.com/story/news/local/wellington/2024/12/06/walmart-lowes-may-bring-big-box-stores-to-westlake-florida-city-manager-says/76597813007/

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Upland Park: Miami-Dade’s $1B Transit-Driven Landmark

A new sight is coming to South Florida. Terra Development will be starting its new development of Upland Park after securing a $170 million construction loan from Slate Property Group for phase 1. The $1 Billion project is set to begin in early 2025, with a formal groundbreaking ceremony. This will mark the start of Miami-Dade County’s largest public-private transit-orientated project in history.

Dual Purpose

The project is set to feature both residential and commercial spaces with phase 1 consisting of 578 apartments. Terra has partnered with PPK Architects, Arquitectonica and Plusurbia Design in order to create 2,000 garden-style and mid-rise apartments. In addition, the project’s 47 acres will also feature 282,000 square feet of retail space and 414,000 square feet of other commercial space.

Why Upland Park

Upland Park was created in order to support Miami-Dade County’s SMART plan. The SMART plan is a large-scale initiative with the purpose of expanding the public transit system to increase the connection within the county. Upland Park will be placed strategically in the East-West Corridor promoting its public transportation by offering a center for housing, retail and commercial spaces. The county hopes to fight its problem of traffic congestion and limit private vehicles. In addition, Upland Park is expected to create thousands of jobs and generate tremendous amounts of revenue.

Upland’s Future

Phase 1 of the project is expected to be completed by the second quarter of 2025, with the construction of residential area. With the timeline of phase 2 undeclared, it can be expected that the Upland Project will not be completed for the next few years.

Sources:

rebusinessonline.com/terra-obtains-170m-construction-loan-for-first-phase-of-1b-upland-park-mixed-use-project-in-south-florida/

www.terragroup.com/property/upland-park/

www.multihousingnews.com/terra-lands-construction-loan-for-1b-miami-project/

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Florida: The New Frontier for International Business Expansion

By Commercial Brokers International

Florida’s dynamic business landscape is attracting international companies and brands at an unprecedented rate, creating exciting opportunities in the state’s commercial real estate market. As a worldwide trading hub and gateway to the Americas, Florida provides unique advantages that are drawing international investment and fueling economic growth.

Why Florida?

  1. A Thriving Economy

Florida’s economy is the fourth largest in the United States and the 14th largest globally, outperforming nations such as Indonesia and Spain. Florida offers a huge market opportunity for foreign enterprises, with a population of 22 million people and an economy worth more than a trillion dollars. (Source)

  • Strategic Location

Florida provides unmatched access to emerging markets as the main commercial gateway to Latin America and the Caribbean. The state is a great starting point for businesses wishing to reach throughout the Americas because of its advantageous geographic location and sophisticated multimodal infrastructure. (Source)

  • Business-Friendly Environment

Florida’s pro-business climate consistently ranks it among the most business-friendly states in the U.S. Key advantages include:

  • Low taxes and no income tax
  • Favorable regulations
  • Competitive costs of living and doing business
  • Skilled Workforce

Florida provides multinational businesses with a vast talent pool of highly educated, technically proficient, and culturally diverse workers, numbering 11.1 million. The state’s concentration on higher education, with 12 public universities, provides a consistent supply of skilled workers.

Florida stands out among other states for its thriving economy,
strategic location, and skilled workforce

Impact on Commercial Real Estate

The influx of international companies is having a significant impact on Florida’s commercial real estate market:

  • Office Space Demand

As more international firms establish their presence in Florida, demand for office space is likely to increase, particularly in major business hubs like Miami, Orlando, and Tampa.

  • Industrial and Logistics Growth

Florida’s role as a global trade hub is driving demand for industrial and logistics properties. International companies are seeking warehouse and distribution facilities to support their operations.

  • Retail Expansion

International brands entering the Florida market are fueling demand for retail spaces, from high-end shopping districts to mixed-use developments.

  • Technology and Innovation Centers

With Florida’s growing reputation as a center for innovation, international tech companies are likely to seek out spaces for research and development facilities.

Global businesses are rising in Florida commercial real estate market

Outlook and Opportunities

The future looks bright for Florida’s commercial real estate market, driven by international investment and remains open for business to the vast majority of international investors. The state’s economic development agencies continue to actively court foreign direct investment, offering resources and support for companies looking to establish or expand their presence in Florida.

For commercial real estate professionals, this influx of international business presents exciting opportunities. From helping companies find the perfect office location to developing state-of-the-art logistics facilities, there’s never been a better time to be in Florida’s commercial real estate market.

As Florida continues to attract global talent and investment, we can expect to see sustained growth and innovation in the commercial real estate sector. Whether you’re representing an international company looking to enter the Florida market or a developer seeking to capitalize on this trend, the Sunshine State offers a wealth of opportunities in the years to come.


If your business is looking to expand nationwide, our CRE Affiliate Network can help you smoothly extend your reach to multiple prosperous states in the country. The journey starts in Florida, and goes beyond.

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Six New Projects Reshaping the Future of West Palm Beach

West Palm Beach, often dubbed “Wall Street South,” is rapidly becoming a key destination for finance and urban living. With multiple new downtown districts in development and a surge of high-rise buildings, the city’s skyline is transforming into a vibrant hub for residents, businesses, and investors alike. Here’s a closer look at six exciting projects leading this evolution:

  1. Nora District
    The Nora District is set to become a 40-acre hospitality haven in Downtown West Palm Beach. Groundbreaking for Phase I took place in June 2023, with a completion target of early 2025. This vibrant area will feature over 150,000 square feet of retail, dining, and office space, reimagining historic railway warehouses into modern venues. Notable retailers include Loco Taqueria, H&H Bagels, and Juliana’s Pizza, alongside a brand-new boutique hotel.
  2. CityPlace
    Undergoing a major redevelopment, CityPlace will introduce two impressive office towers designed to attract leading financial firms. The East Tower is poised to be the tallest office building in the county, complemented by a luxurious residential tower called “The Laurel.” Enhancements to public spaces will create a more welcoming atmosphere, making it a premier destination for all.
  3. The District at Northwood
    This 4.6-acre site in Northwood Village is transforming into a vibrant community hub, featuring a multifamily residential complex with 382 units, including workforce housing. The project will offer 63,000 square feet for commercial use, enhancing the local dining and retail scene, along with 12,000 square feet of public open space for community gatherings.
  4. West Palm Point
    A new landmark office tower is on the way at 801 South Dixie Highway, designed by renowned firm Pelli Clarke Pelli. The 24-story West Palm Point will include 447,484 square feet of office space, ground-floor retail, and a 10-story parking garage. With plans for a
    pedestrian-friendly Paseo and ample green spaces, it aims to integrate seamlessly into the urban landscape.
  5. South Flagler House
    Led by billionaire Stephen M. Ross, this luxury condominium project is making waves in West Palm Beach. Featuring two 28-story towers with 108 units, the South Flagler House will offer high-end living along the Intracoastal Waterway. Ranging from 2,000 to over 13,000 square feet, these residences come with premium amenities and stunning views, targeting an affluent clientele transitioning to high-rise living.
  6. Mr C. Residences
    Set to debut in late 2026, Mr. C. Residences promises to blend upscale living with exceptional hospitality. This 27-story development will feature 110 hotel rooms and 146 branded residences, all designed with luxurious finishes and private terraces. Residents can enjoy a rooftop restaurant, a chic café, and an exclusive members’ lounge, creating a vibrant social atmosphere.
    As West Palm Beach continues to grow and attract new investment, these projects are not just reshaping the skyline but also enhancing the quality of life in this thriving city. Stay tuned for more updates on this exciting urban transformation!
    Nicholas, J. (2024, July 15). Six new projects are reshaping the future of West Palm Beach. Florida Tomorrow. https://www.floridaoftomorrow.com/post/six-new-projects-that-are-reshaping-the-future-of-west-palm-beach
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Commercial Real Estate Investing: A Beginner’s Guide to Getting Started

A Beginner's Guide to Getting Started in Commercial Real Estate Investing

Commercial real estate (CRE) encompasses properties used for business purposes, ranging from office spaces to retail storefronts, medical facilities, and industrial warehouses. Contrary to popular belief, CRE isn’t limited to just business buildings; it also includes land used for profit and large residential rental properties like apartment complexes.

Types of Commercial Real Estate

CRE covers a variety of property types:

  • Office Spaces: Buildings used for business operations.
  • Industrial Spaces: Warehouses and manufacturing sites.
  • Retail Spaces: Storefronts and shopping centers.
  • Medical Buildings: Hospitals and healthcare facilities.
  • Storage Facilities: Spaces for storing goods.
  • Apartment Buildings: Structures with five or more units.
  • Restaurants, Hotels, and Resorts: Properties for dining and accommodation.

How Commercial Leases Work

When a business leases a space, they enter into a lease agreement with the property owner. There are three main types of commercial leases:

  1. Gross Lease: The landlord covers all property expenses, including taxes and maintenance.
  2. Net Lease: The tenant pays rent plus additional expenses like taxes and insurance. Variants include single, double, and triple net leases.
  3. Modified Gross/Net Lease: Offers flexibility in expense negotiations, with a fixed monthly rent.

Triple net leases are common, where tenants cover all operating expenses, leaving the landlord with only mortgage and tax responsibilities.

Investing in Commercial Real Estate

Investors can choose between direct and indirect investment options:

  • Direct Investment: Buying and managing a property personally or through a partnership. This method offers control and potential tax benefits but requires substantial capital and is less liquid.
  • Indirect Investment: Purchasing shares in a real estate investment trust (REIT) or through crowdfunding platforms. This approach allows for smaller investments and offers diversification without hands-on management.

Key CRE Terms to Know

Familiarize yourself with essential CRE vocabulary:

  • Net Operating Income (NOI): Income after operating expenses.
  • Cap Rate: NOI divided by the property’s purchase price.
  • Debt Coverage Ratio (DCR): NOI divided by annual debt payments.
  • Zoning: Regulations on property use and construction.
  • Triple Net Lease: Tenant pays all building expenses beyond rent.

Building Your CRE Network

To succeed in CRE, build relationships with:

  • Commercial Real Estate Agents: Assist with property searches and market trends.
  • Property Managers: Handle tenant interactions and maintenance.
  • Lenders/Mortgage Brokers: Facilitate property financing.
  • Insurance Agents: Provide property and liability coverage.
  • Contractors/Handymen: Manage repairs and renovations.
  • Attorneys: Handle legal matters and contract reviews.

Is CRE Investing Right for You?

CRE investing offers diversification and potential profitability, particularly for those with substantial capital or those who can start with smaller investments through modern platforms like REITs and ETFs. Evaluate if CRE fits your goals by considering:

  • Initial investment size.
  • Competition and market demand.
  • Lease stability and income consistency.
  • Professional assistance needs.

In summary, commercial real estate presents diverse opportunities and requires a solid understanding of property types, lease structures, and investment strategies. Whether starting with small investments or diving into larger deals, having the right knowledge and team is crucial for success.

Works Cite

Lee Huffman                                                                                                                                                                  Edited by : Becca Borawski Jenkins. “Commercial Real Estate Investing: A Beginner’s Guide to Getting Started [2024].” FinanceBuzz, 13 May 2024, financebuzz.com/commercial-real-estate-investing. Accessed 26 Aug. 2024.

https://financebuzz.com/commercial-real-estate-investing