Florida Ends Commercial Rent Tax After 55 Years

2% rent savings hits Florida tenants Oct. 1, but will landlords let it stick?

Jordan B.
August 14, 2025

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Good morning. Florida just erased its 55-year-old commercial rent tax, delivering a 2% rent break for tenants and a competitive boost for the state’s CRE market. The big question now: will the savings stay in tenants’ pockets or flow back to landlords?

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Market Snapshot

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*Data as of 08/13/2025 market close.

TAX BREAK

Florida Ends Commercial Rent Tax After 55 Years

Starting October 1, Florida will officially scrap its unique tax on commercial lease rents, cutting costs for tenants and giving the state a new edge in the competition for businesses.

What’s changing: Florida’s commercial rent tax—once over 6% and at 2% in 2024—will vanish entirely. A tenant paying $100K/mo will save about $24K/yr. Tenants should see immediate benefits, though landlords in strong markets may reclaim some through higher rents, while softer markets may hold rates to attract or retain tenants.

The broader impact: The repeal is part of a $2.2B tax relief package aimed at boosting Florida’s business appeal, especially against high-tax states. Nearly $19B in securitized retail, office, and industrial loans in the state will be affected, with the Miami metro alone representing $10.3B—over half in retail.

Market fundamentals: Retail and industrial vacancies remain tight (under 5%), while office vacancies top 8% but beat the 15.08% national CMBS average. Asking rents are down about 3% since 2022 for retail and industrial, while office rents sit near peaks. In some markets, effective rents exceed asking, hinting at softening tactics like lower listed rates or aggressive escalations on existing leases.

Debt yield trends: Industrial loans in 2025 average an 8.98% debt yield, down from 14.58% in 2023, signaling looser lending standards. Office and retail yields remain higher at 12.80% and 11.80%, reflecting tighter underwriting. For near-term maturities, improved tenant affordability from the repeal could help close refinancing gaps.

Cap rate movements: Office cap rates have climbed to 8.33% in 2025, retail has eased to 6.42% after a 2023 spike, and industrial has stayed relatively stable but volatile. The repeal could slightly compress cap rates in tenant cost-sensitive sectors, but it won’t erase structural concerns in office.

➥ THE TAKEAWAY

Big picture: Florida’s rent tax repeal won’t boost in-place NOI overnight, but it strengthens leasing economics, especially for retail and industrial. In tight submarkets, it may give landlords pricing power; in softer ones, it could spur leasing. Overall, the shift tilts Florida’s CRE toward stronger tenant retention and long-term competitiveness.

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