Investing in commercial real estate requires more capital and a higher risk appetite compared to residential real estate. However, this lucrative industry is known for delivering consistent returns and a rewarding passive income. So if you are looking for an excellent location to invest in commercial real estate, check out these reasons that make Florida one of your best options.
What Is Commercial Real Estate?
Before investing, you must understand this side of the industry. Commercial real estate (CRE) refers to properties aimed at generating income. These can range from small stores to business offices, hotels, and more. Such properties are categorized into four primary sectors: retail, industrial, office, and multifamily. Typically, commercial properties are leased or rented to tenants to gain profit, with agreements varying from one owner to another.
Whether you’re a first-timer in real estate or you’ve had experience investing in other kinds of real estate, it would be best to seek advice from a commercial real estate expert before investing. This way, you can avoid the pitfalls, extreme losses, and common mistakes investors experience.
Why You Should Invest in Commercial Real Estate in Florida
1. Stable Economy
US News & World Report’s 2021 Economy Rankings placed Florida at #8 among the strongest economies in the entire United States. To further expand on Florida’s appealing economic condition despite the COVID-19 pandemic, its rank was based on factors including job growth, net migration, and venture capital per gross domestic product (GDP).
According to the report, Florida has a 2.4% job growth, which is higher than the 1.4% national average. Moreover, the state has a 1.3% net migration compared to the 0.2% national growth. On the other hand, its venture capital per GDP is at $2.59 per $1K GDP, in contrast to the national average of $6.05.
2. Fast-Growing Population
A rapidly growing population means greater demand for businesses. As mentioned in World Population Review’s Fastest Growing States 2021 article, Florida ranked 7th for having a 1.12% (478,386) growth percentage, creating a more competitive market within the state. In addition, Florida’s population has increased by 14.6% from 2010 to 2020, creating a massive opportunity for economic growth.
3. Favorable Tax Rates
Florida is among the seven states that do not charge individual income tax. In addition, estate and intangibles taxes are waived here, making it one of the best places for entrepreneurs and investors. Moreover, the state is 4th on the Tax Foundation’s 2021 Business Tax Climate Index. The cost of living in Florida is also relatively lower than most east coast states.
4. Strong Commercial Markets
Based on National Association of Realtors’s (NAR) 2021 Commercial Market Conditions Index Ranking, Florida has five cities with the strongest commercial markets. The index report was based on economic and demographic conditions, along with commercial market indicators.
Below are the Florida cities with the strongest commercial market conditions in the second quarter of 2021:
- Cape Coral
- Punta Gorda
- Port St. Lucie
- North Point-Bradenton-Sarasota
- West Palm Beach-Boca Raton-Delray Beach
Bottom Line
Investing in commercial real estate comes with both high risks and higher potential returns. By choosing a business- and investor-friendly state like Florida, you can develop a higher confidence in investing. If you need professional commercial real estate services in Florida, The Vision Group can help. Do send us a message so that we can assist you with your real estate concerns.
