Commercial Real Estate Frequently Asked Questions
Among the most common questions from our clients are:
1. What transactions are part of Commercial Real Estate (CRE) in Florida?
In Florida, Commercial Real Estate (CRE) encompasses all transactions related to properties intended for commercial, industrial, or investment use, primarily governed by Florida Statutes Chapter 475.
The main transactions include:
Purchase and sale of commercial properties (retail, office, industrial, multifamily with 5+ units)
Commercial leases, including negotiation and renewals
Subleases and lease assignments
Sale of businesses (business opportunities) when a real estate component is involved
Representation of landlords or tenants in negotiation processes
From a legal standpoint, these transactions require the involvement of a licensed broker when there is compensation-based intermediation, and they are subject to Florida’s contractual principles and case law regarding leases, obligations, and contract enforcement.
In simple terms, any transaction involving the negotiation, sale, or leasing of space for economic activity falls within CRE.
2. What are the costs associated with signing a commercial lease for the tenant?
In Florida, the costs associated with a commercial lease are not standardized by law as they are in residential leases, since they are primarily governed by contractual negotiation and general legal principles under the Florida Statutes.
However, in CRE market practice, a tenant should consider the following costs:
Security deposit, typically between 1 to 3 months of rent
First month’s rent (and in some cases, last month’s rent)
Base monthly rent
CAM (Common Area Maintenance)
Property taxes (proportional, in NNN leases)
Insurance (liability insurance required by the lease)
Build-out or tenant improvement costs
Permits and operational licenses
Potential legal fees for contract review
Additionally, in Florida there is a Sales Tax on Commercial Rent, meaning the tenant must pay state tax on commercial rent (plus any applicable county surtax).
In simple terms, the true cost of occupancy is not just the rent, but the sum of all these elements, which must be carefully analyzed before signing.
3. How is rent calculated in Commercial Real Estate (CRE)?
In Florida, commercial rent is not set by law but is determined by market conditions and negotiation between the parties, under general contractual principles.
In practice, rent is primarily calculated based on the annual price per square foot (PSF).
The basic formula is:
Annual Rent = Price per SF × Space size (SF)
Monthly Rent = Annual Rent ÷ 12
For example, a 1,500 SF space at $30/SF annually:
1,500 × 30 = $45,000 per year → $3,750 monthly (base rent)
Additional costs may apply depending on the lease structure:
CAM
Taxes
Insurance
In structures such as NNN, the tenant pays these additional expenses, which together are referred to as the total cost of occupancy.
Additionally, factors such as location, property type, market demand, and tenant profile directly influence the final rental value.
In simple terms, rent in CRE is not a fixed number; it is the result of market dynamics + per-square-foot metrics + lease structure.
4. What is a Triple Net (NNN) lease and how does it actually impact your business?
A Triple Net (NNN) lease is a common structure in Florida where the tenant pays not only the base rent, but also the operating expenses of the property.
This includes:
CAM (Common Area Maintenance)
Property taxes
Property insurance
From a legal standpoint, these costs are contractually established and enforceable according to what is agreed between the parties under Florida’s general contract law framework.
In practice, this means the tenant assumes most of the property’s expenses, while the landlord receives a more “net” rent.
The real impact lies in the total cost of occupancy:
A space may be advertised at an attractive price per square foot, but once CAM, taxes, and insurance are added, the monthly cost can increase significantly.
For this reason, before signing, it is essential to analyze not only the base rent, but the total:
Base Rent + CAM + Taxes + Insurance
In simple terms, NNN is neither good nor bad; it is an efficient structure, but it must be fully understood to avoid financial surprises.
5. Who pays the commission in a commercial lease?
In Florida, the commission in a commercial real estate transaction is not fixed by law, but rather established by agreement between the parties, in accordance with Florida Statutes Chapter 475.
In market practice, the broker’s commission is generally paid by the landlord, who previously agrees on compensation with the listing broker, which may then be shared with the broker representing the tenant.
This means that, in most cases, the tenant can have professional representation without directly assuming that cost.
However, it is important to understand that the commission is part of the overall economic structure of the deal and may be implicitly reflected in the general rental agreement.
Therefore, beyond who pays the commission, what truly matters is having proper representation that helps negotiate better terms and protect the client’s interests.
In simple terms, the landlord usually pays the commission, but the value a good broker brings can significantly impact the outcome of the negotiation.
6. Can I lease a commercial space if I’m starting a business?
Yes, it is absolutely possible to lease a commercial space in Florida with a new business, but it will depend on how you present your profile to the landlord.
Unlike the residential market, in Commercial Real Estate the landlord primarily evaluates the tenant’s risk. If the business is new, it is common for the landlord to request additional guarantees such as:
Higher deposits
A personal guarantee
Financial statements or proof of financial backing
A clear business plan
In my experience, what matters most is not whether the business already exists, but the strength of the operator, the viability of the concept, and the ability to comply with the lease.
Many landlords in Florida are open to new businesses if they see structure, preparation, and commitment.
In simple terms, yes, you can lease a space, but you must present the business professionally in order to build confidence.
7. Why should I be represented by an experienced Commercial Real Estate broker?
In a commercial transaction, you are not just negotiating a space — you are committing your business or investment for several years.
An experienced Commercial Real Estate broker helps you understand the market, identify real opportunities, and, most importantly, negotiate terms that directly impact your profitability.
In Florida, commercial leases are not standardized as they are in the residential market, which means that many terms are negotiable: rent, increases, CAM, grace periods, build-out contributions, among others.
Without proper representation, it is easy to overlook conditions that can cost you thousands of dollars over the life of the lease.
In addition, a specialized broker filters options, saves time, and guides you throughout the entire process, from the search to the signing.
In simple terms, it is not just about finding a space, but about structuring a good deal from the beginning.
8. Who determines the permitted use of a commercial space?
The permitted use of a commercial space in Florida is not determined by just one person, but by the combination of three main factors:
Zoning: determined by the city or county, it establishes what types of activities are allowed on the property.
The landlord: through the lease, the landlord may approve or restrict certain uses based on the tenant mix or the property’s overall strategy.
Regulations and permits: some activities require specific licenses or compliance with health, safety, or building code requirements.
In practice, even if a property’s zoning allows your type of business, the landlord must still approve that use within the lease agreement.
For that reason, before signing, it is essential to confirm that the intended use is permitted both by the city and by the lease.
In simple terms, it is not enough for you to like the space; it must also be legally viable and contractually approved for your business.
9. What is an LOI (Letter of Intent) and why is it important?
An LOI (Letter of Intent) is a preliminary document in which the tenant and the landlord set out the main terms of a negotiation before the formal lease is prepared.
Although it is generally not fully legally binding, it does establish the foundation of the agreement and guides the drafting of the final contract.
A typical LOI includes:
- Base rent
- Lease term
- Rent increases
- CAM / NNN
- Deposit
- Grace periods
- Build-out contributions (TI allowance)
In practice, the LOI is one of the most important stages of the negotiation, because it is where the key terms of the deal are established.
A lease rarely improves upon what was agreed in the LOI; on the contrary, it usually formalizes it.
In simple terms, a good LOI means a good negotiation from the start.
10. What happens if I break a commercial lease early?
In Florida, a commercial lease is a legally binding contract that requires all parties to comply with the agreed terms for the full duration of the lease.
Unlike the residential market, there are no standardized tenant protections, so the consequences of early termination depend almost entirely on what is stated in the contract.
The most common consequences include:
• Payment of future rent (accelerated rent), depending on the default clause
• Loss of the security deposit
• Liability for additional damages suffered by the landlord
• Reletting costs, including commissions, tenant improvements, and concessions to a new tenant
In many cases, the landlord has the right to enforce the full lease term or claim financial damages resulting from early termination.
However, some leases may include negotiated options such as:
• Early termination clause
• Buyout agreements
• Assignment of the lease
In simple terms, exiting a lease early can be costly and complex, so it is critical to evaluate this risk during the negotiation stage.
11. What is CAM and how can it affect my monthly costs?
CAM (Common Area Maintenance) refers to the expenses associated with maintaining and operating the common areas of a commercial property.
In Florida, these costs are typically distributed among tenants based on the size of their leased space (proportionate share).
CAM may include:
• General maintenance and cleaning
• Security
• Landscaping
• Common area lighting
• Property management
• Repairs and infrastructure maintenance
One of the most important aspects of CAM is that it is not a fixed cost; it can vary annually based on the landlord’s budget and actual operating expenses.
For this reason, it is essential to review:
• Historical CAM data from previous years
• Current budget
• Reconciliation clauses
• Caps or limits on increases
In simple terms, CAM can represent a significant portion of total occupancy costs, and understanding its structure is key to avoiding financial surprises.
12. What is Tenant Improvement (TI) and who pays for it?
Tenant Improvement (TI) refers to the modifications, build-outs, or construction work required to adapt the space to the tenant’s business needs.
In Florida, TI is not regulated by law; it is a fully negotiable component within the lease or LOI.
The most common structures include:
• TI Allowance: the landlord contributes a set amount per square foot
• Tenant-funded build-out
• Hybrid model shared between both parties
Typically, the tenant is responsible for executing the work, hiring contractors, and obtaining permits, while the landlord may contribute financially under certain conditions.
It is important to understand:
• When the TI funds are disbursed (before or after construction)
• What requirements must be met to receive the allowance
• Whether there are deadlines to use the funds
• What happens if the actual cost exceeds the allowance
In simple terms, TI represents the investment required to make the business operational, and proper negotiation can significantly reduce initial capital requirements.
13. How long does it take to lease a commercial space in Florida?
The time required to lease a commercial space in Florida varies depending on the property type, market conditions, and the tenant’s level of preparation.
The process typically includes several stages:
• Property search and analysis
• LOI negotiation
• Lease drafting and review
• Landlord approval
• Permits, licenses, and build-out
In general, this process can take between 4 to 12 weeks, although more complex projects may take longer.
Factors that can speed up the process include:
• Having a clear business concept
• Preparing financial documentation in advance
• Making timely decisions
• Working with an experienced commercial broker
In simple terms, the more prepared the tenant is, the faster and more efficient the leasing process will be.
14. What should I review before signing a commercial lease?
Before signing a commercial lease in Florida, it is essential to analyze not only the rent but the entire structure of the agreement, as it will define the operational and financial conditions of the business long term.
The most important points to review include:
• Permitted Use
• Base rent and annual escalations
• CAM and additional costs
• Lease term and renewal options
• Default clauses and penalties
• Maintenance and repair responsibilities
• Tenant Improvement (TI) conditions
• Personal or corporate guarantees
It is also critical to verify that the space is legally viable, including zoning, permits, and regulatory compliance.
In simple terms, a commercial lease is not just a document—it is a framework that directly impacts the profitability of the business.
15. Can a foreign investor invest in Commercial Real Estate in Florida?
Yes, in Florida there are generally no restrictions preventing foreign investors from purchasing or investing in commercial real estate.
Investments can be made through:
• Individuals
• LLCs
• Corporations
However, it is important to consider key factors such as:
• Legal structuring of the investment
• Tax implications, including FIRPTA
• Access to financing
• Immigration objectives, such as the E-2 visa
For investments tied to immigration purposes, the project must meet specific requirements, such as being an active investment and generating employment.
In simple terms, foreign investors can freely invest in commercial real estate in Florida, but proper legal and tax structuring is essential to maximize benefits and minimize risk.
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