Kingsley added that this will give local companies the flexibility to reallocate capital toward other aspects of real estate or investments.

TAX ELIMINATION WILL CONTINUE FLORIDA'S POPULATION BOOM

Of course, Florida was already considered one of the most business-friendly states in the country. The sales tax CRE removal will only add to the appeal, as currently, Florida is the only state to charge a sales tax on CRE property rentals. Since the pandemic, Kingsley highlighted that Florida has enjoyed a population boom from many Northeast states like New York, while folks from the Midwest and California have also flocked down to the Sunshine State. He noted that this trend could continue, as the state benefits not only tax-free competitive advantages — but the warmer climate all season round is appealing as well.

"The incentives in Florida have been quite robust for tenants to move here, so that's been a big boost to South Florida," Kingsley said while adding "compare that to other parts of the country; it's been a little bit of a slower recovery, obviously [in the] post-COVID era."

From the elimination of the CRE sales tax, Kingsley thinks multiple asset classes will benefit, including office, industrial and retail.

"Industrial [is needed] to provide the goods right to the companies that are servicing their clients here in retail to better sell those goods, and then obviously office to sort of manage what's happening within those businesses," he explained.

LAND CONSTRAINT COULD POSE A PROBLEM

But there's one problem Florida could face if the state experiences another population boom — the land constraints, according to Kingsley.

"Infrastructure is not necessarily in place in terms of roads, public transportation, schools, synagogues, churches, every type of amenity that residents are looking for is now constrained because there's just not enough land to build to the scale of the population growth," he admitted.

And Kingsley acknowledged that the market only contains a limited number of single-family homes. While not ideal, multifamily is seeing higher demand, as a result, according to Kingsley.

RETURN TO OFFICE DRIVING FLORIDA CRE

Overall, he calls the Florida CRE market "robust," particularly for office, as more companies are requiring their employees to return to the office.

"The result of that is increased occupancy, increased rents, and a benefit to the overall economy," Kingsley highlighted.

But his one question is how the state will make up the lost revenue from the sales tax? Will it come from another population boom and more residents pouring money into the local economy? That remains to be seen, and what will happen to the state's deficit.

The CRE sales tax elimination will go into effect on October 1.