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Florida Eliminates Sales Tax on Commercial Leases Starting October 1, 2025

In a major win for the Florida commercial real estate industry, Governor Ron DeSantis signed legislation on June 30, 2025, that officially repeals the sales tax on commercial rentals, effective October 1, 2025. Florida has been the only state that charges sales tax on commercial leases. This long-anticipated move makes Florida more competitive for businesses seeking to lease office space, retail storefronts, and industrial warehouse properties.

What Changed?

For decades, Florida was the only state to impose a sales tax on commercial lease payments, often referred to as the Business Rent Tax (BRT). Under Florida Statute § 212.031, businesses were required to pay sales tax on their commercial leases, a significant expense that impacted the cost of leasing commercial real estate. Previous years in Hillsborough County, sales tax has been upwards of 6% and 7%. Currently, in Hillsborough County is 3.5%.

Now, thanks to House Bill 7073, all state and local sales taxes on commercial leases will be completely eliminated as of October 1, 2025.

Direct from theFlorida Department of Revenue – Sales Tax Overview

Why This Matters to Florida Businesses:

This repeal is a game-changer for tenants and landlords across the state:

  • Lower Occupancy Costs – Businesses leasing office or warehouse space will see immediate savings.
  • Boost for Leasing Activity – This move is expected to stimulate demand for commercial properties in Tampa, Miami, Orlando, Jacksonville, and other key Florida markets.
  • Stronger Business Attraction – Removing the tax improves Florida’s standing among companies comparing commercial lease costs in different states.

If you’re currently searching for office space for rent Tampa, this legislative change just made it more affordable and appealing than ever before.

Important Notes for Landlords & Tenants:

Final Thoughts:

This bill is especially relevant to companies relocating to Florida, expanding into the Tampa Bay (especially Hillsborough County) or seeking to lower their lease expenses, this is one of the most impactful legislative changes in decades. Florida is now officially aligned with every other U.S. state, no more sales tax on commercial leases.

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Why You Need A Commercial Real Estate Broker To Represent You, Even When You Know The Landlord

Venturing into a new office space lease can feel intimidating. There are so many questions you may have, concerns about things unknown. That’s why having a Commercial Real Estate Broker working on your side is crucial to a successful journey in finding your next office space for rent in Tampa.

Landlords will always have their best interest in mind as the owner and investor of the building. Brokers, on the other hand, are working with your best interest in mind. Even when you have a good working relationship with the Landlord, they are still focused on protecting themselves and their property first and foremost at the end of the day. You could be in a position of thinking you are getting a pretty good deal on your lease and your commercial property for rent in Tampa but are you really? Here are a few things to consider:

Are you aware of current marketing conditions, concessions by Landlords and standard business terms? 

Do you have comparisons to a deal on the table with other possible small office space for rent in Tampa?

When you have concerns about a potential space, who is going to give you honest feedback and real insight about what will work best to meet your real estate needs?

When you don’t have the full overview of the Tampa Bay real estate market, it’s nearly impossible to really get the best possible lease. That’s why having the right Broker can educate you on the market as a whole and advise on business points they are experiencing and seeing at competing properties. Understanding what is a market norm is very important in negotiating a commercial lease and choosing which Landlord to have a long-term business relationship. 

Commercial Real Estate Brokers are also skilled in negotiating terms. They will seek to get you the office space of your dreams with a lease and terms that are not full of deal breaking concessions. Your Broker will help ensure that you are not paying exorbitant Common Area Expenses, hidden fees and other thumbs-down terms but instead that you are treated to a fair lease with all the amenities, parking spaces and square footage you need.

When you need an office space, you need Office Space Brokers.

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Basics you must know about a Modified Gross Lease

A Modified Gross Lease is a type of lease agreement that is commonly used in commercial real estate for office space. It is a hybrid between a Full Service lease and a Triple Net lease, which allows for some flexibility in terms of which party is responsible for certain expenses associated with the property. In a Modified Gross Lease, the Landlord and Tenant share some of the costs associated with the property, while others are the sole responsibility of one party or the other. 

The Tenant’s rents include paying the base rent and the budget expenses including taxes, maintenance, and other operating expenses. The Tenant is responsible for their own electricity and their janitorial cleaning services. Tenants may receive an invoice for their proportionate share (based on their square footage) based on the Landlord’s reconciliation of their annual budget which surpassed the Tenant’s Base Year or expense stop. The Tenant is responsible to pay any increase in those expenses above the Expense Stop amount. These overages should be nominal since these expenses are budgeted by the Landlord. 

The specific terms of a Modified Gross Lease can vary, but generally speaking, the Landlord will be responsible for paying certain expenses related to the property, such as property taxes, insurance, and maintenance. Meanwhile, the Tenant will be responsible for paying for certain utilities, such as electricity and water, as well as any expenses related to their specific use of the property, such as cleaning, HVAC repairs, plumbing within their Suite etc.

Advantages of Modified Gross Lease for Tenants

Flexibility in terms of which party is responsible for certain expenses can be a great advantage for Tenants who may not have the financial resources to pay for all of the expenses associated with a property on their own. By sharing some of these costs with the Landlord, Tenants can reduce their overall expenses and potentially afford a property that would otherwise be out of reach.

Minimize disputes between Landlords and Tenants by clearly defining which expenses are the responsibility of each party, there is less room for misunderstandings or disagreements. This can help to create a more positive and productive relationship between the Landlord and Tenant, which can be beneficial for both parties in the long run.

Disadvantages of Modified Gross Lease for Tenants

There are also some potential drawbacks to a modified gross lease. Monthly office expenses can fluctuate because the Tenant is paying utilities directly. An issue arises when you have fluctuating utilities so you must make sure they have a buffer in their budget when budgeting expenses because the cost can vary each month.

 

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The basics you must know about a Triple Net Lease

Triple Net Lease, also known as NNN lease, is a commercial real estate lease in which the Tenant is responsible for paying for all or some of the property’s Operating Expenses or sometimes called, Common Area Maintenance. These expenses can include property taxes, insurance, maintenance for common areas costs. In a Triple Net lease, the Tenant not only pays rent but also assumes financial responsibility for the upkeep and maintenance of the property. This type of lease is common in commercial real estate, particularly in retail and warehouse spaces and less likely to come across in office space. 

Benefits of Triple Net Leases For Landlords

Landlords can easily project their income stream, as the Tenant is responsible for the expenses associated with the property. There can be years when Real Estate Taxes and Insurance increase, those increased amounts can be passed directly to the Tenants.  Landlords can use this predictable income stream to secure financing for additional real estate investments or to reinvest in the property itself. Tenants being responsible for maintaining the property, Landlords can minimize their involvement in the day-to-day management of the property.

Disadvantages of Triple Net Leases For Landlords

If the Tenant fails to pay for expenses such as property taxes or insurance, the Landlord may have to cover those costs, leading to financial losses. Furthermore, if the Tenant is responsible for maintenance, the Landlord may not be aware of issues that arise, leading to potential property damage that could reduce the property’s value.

Benefits of Triple Net Leases For Tenants

Triple Net leases can provide more control over the property and potentially lower costs since they are responsible for maintenance and repairs by choosing which vendors to use or update themselves. Additionally, since Tenants have more control over the property’s upkeep, they can customize the space to fit their specific needs. This can be particularly advantageous for businesses with unique requirements, such as medical offices or laboratories.

Disadvantages of Triple Net Leases For Tenants

Tenants should also be aware of the potential downsides of Triple Net leases. If the property requires significant maintenance or repairs, the Tenant may be responsible for substantial expenses. Property Taxes and Insurance can fluctuate and subsequently may face higher costs if Property values or Insurance rates increase.

Triple Net leases can benefit Landlords and Tenants. Landlords can secure a stable income stream and minimize their involvement in property management, while Tenants can have more control over the property and potentially lower costs. It is essential for both parties to understand the potential downsides of triple net leases, such as financial risks and increased expenses. As with any real estate transaction, it is crucial to carefully review and negotiate the lease terms to ensure a mutually beneficial arrangement.

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The Rise of Florida Commercial Real Estate Market Trends

Florida's commercial real estate markets poised for continued growth - South Florida Business Journal

 

The Rise of Florida Commercial Real Estate Market Trends

The Commercial Real Estate market in Florida has experienced significant growth and change over the past few years. Due to the state’s favorable business climate, growing population, and low taxes have made it an attractive destination for companies looking to expand or relocate. We will discuss five of the current trends in Florida’s Commercial Real Estate market.

Growth of the Industrial Warehouse Sector

With The rise of e-commerce and online shopping and specifically service-based industries in Florida,  the demand for warehouse and distribution facilities has increased significantly. As a result, developers are building larger and more sophisticated industrial buildings to meet this demand. According to CBRE Florida ranks third in the nation for the total square footage of new industrial construction.

Flight To Quality and Flexible Office Arrangements 

The growth of remote work and the gig economy, many companies are seeking flexible workspace solutions that can accommodate their changing needs. Co-working spaces, which offer shared office space and amenities, have become increasingly popular in Florida’s urban areas. We are calling a “flight to quality” for companies who are choosing to lease office space in locations with buildings that provide amenities for Tenants and located where their ideal employers live, work and play. In Tampa, we are seeing this example in Westshore and Downtown Tampa. 

The Hospitality Sector Has Bounced Back and There Is No Looking Back

Florida’s tourism industry continues to thrive, with record numbers of visitors each year. According to Visit Florida, the state’s official tourism marketing corporation, Florida welcomed a record-breaking 135.5 million visitors in 2022. As a result, developers are building new hotels and resorts to meet the demand. Additionally, there is a growing trend of mixed-use developments that combine hotel, residential, and retail space. In Tampa Bay we have experienced an influx of new restaurants in Downtown Tampa’s Water Street community and Midtown, both mixed use developments which opened their doors to Tenants and patrons in the past two years. 

Retail Isn’t Dead, It Might Look a Little Different Though

Florida’s retail sector has been impacted by the growth of e-commerce, with many brick-and-mortar retailers struggling to compete. Fair to say we will be seeing changes in malls and the reuse of some of the big box Tenants being reimagined to smaller footprints and more experienced focused purposes. 

Florida’s favorable business climate and growing population have created opportunities for retail developers who can provide unique shopping experiences. According to Macro Trends Tampa Bays Population was 2,945,000 in 2022 and currently 2,977,000 in 2023. For example, outdoor shopping centers that offer dining, entertainment, and community events have become popular in Florida’s urban areas. Midtown which is centrally located between Westshore, South Tampa and Downtown Tampa is a prime example of new national retailers and restaurants who have expanded into Tampa Bay. 

Race for Multifamily Developers

Florida’s population is projected to continue to grow, with many young professionals and retirees moving to Florida. As a result, developers are building new apartment buildings and condominiums to meet the demand. Tenant’s are demanding convenience and desiring more than an apartment but built in a community with a small grocery and other day to day needs. No longer are the days where developers are delivering apartment complexes without a retail component for their Tenants.

Florida’s commercial real estate market is evolving to meet the increased demand by population growth plus the lack of existing housing. Florida’s  favorable business climate and low taxes are playing a key role in driving the economy forward. Developers are building larger and more sophisticated industrial buildings, co-working spaces and flexible office arrangements are becoming increasingly popular, and the hospitality, retail, and multifamily sectors are all experiencing growth. As the state’s economy continues to thrive, it is likely that these trends will continue, creating opportunities for real estate investors and developers in Florida.