9 Essential Tips for Selling Your Commercial Property in South Florida
The South Florida commercial real estate market is making waves. Identified by Goldman Sachs as one of just two US markets predicted to witness price appreciation in the coming year, the region’s commercial real estate market is heating up. Wealth migration, an influx of cash buyers, and a trend of corporate relocations to the Sunshine State are fueling this bullish market.
As a testament to the strength and stability of South Florida’s commercial real estate market, US News & World Report ranks Florida thirteenth in terms of fiscal stability. According to the NAR’s Commercial Real Estate Metro Market Report for the Miami-Fort Lauderdale-Pompano Beach metro area, all asset classes (including office space) saw market rent growth over the past 12 months. Industrial assets were the clear superstar, with market rent growth coming in at 17.9%
South Florida’s commercial market appeal reaches far beyond domestic borders; it has attracted significant foreign investment, most notably from global players in China, Canada, Germany, Singapore, Saudi Arabia, and Qatar. This convergence of foreign capital, alongside the region’s economic strength, has rendered South Florida commercial properties a high-yield investment opportunity.
Needless to say, if you’re an owner of real estate in South Florida, you’ve made an incredible investment, and it’s highly likely your asset has appreciated significantly.
If you’re thinking of cashing in on your investment and selling commercial property in South Florida, here are some tips to help you maximize your sale price.
1. Get an Inspection and Make Repairs
No matter how strong the South Florida commercial real estate market might be, a building in disrepair will deter potential buyers.
Conduct a thorough inspection of the property to identify any maintenance or repair needs. Fixing issues beforehand can enhance the property’s appeal and prevent potential deal-breakers during negotiations.
2. Consider How You Can Improve Lease Terms
If the property has existing tenants (especially if they are on a month-to-month lease or a lease that expires soon), review the contract and consider how you can optimize the agreement.
Easy value can be found through simple adjustments to lease terms. Examples include increasing rent, converting the lease to a double or triple net lease, or extending the lease term. Favorable lease terms will attract potential buyers and help your property sell for the highest possible price.
3. Enhance Curb Appeal
Just like residential real estate, first impressions matter. Investing some money into improving the building’s exterior will help attract more buyers who are sifting through listings.
Items that you could improve include:
- Investing in landscaping for green spaces
- Adding or updating energy-efficient exterior lighting.
- Renovating the façade, such as new paint or replacing siding.
- Installing updated signage and branding.
- Refurbishing entryways and doors
- Cleaning windows
- Refinishing parking, driveway, and pathway surfaces.
4. Put Together a Comprehensive File of Property Information
Potential buyers will want to review all necessary documentation associated with the property as part of their due diligence process. Providing all relevant documents and information can streamline the due diligence process and instill confidence in prospective buyers.
Information that you should collect includes:
- Blueprints and floorplansof the property. These documents show the property’s layout, dimensions, and structural elements, which buyers use to assess space use, estimate potential renovation costs or use just to understand the flow of the property prior to inspection.
- Surveys of the landthat indicate the property’s boundaries and any easements or encroachments.
- Zoning details, which can impact the type of businesses that can operate on the property.
- Environmental reportsthat may have been conducted.
- Permits and approvals, including building permits, occupancy permits, environmental permits, and any other relevant licenses.
- Property tax informationshowing that taxes are up-to-date and showing payment history.
- Lease agreements and tenant informationof any existing tenants. This includes the lease contract with terms, rental rates, lease expiration dates, and any ongoing disputes or issues.
- Financial statementssuch as an accurate income and expense report for at least the past three years.
- Insurance documentationthat shows the property’s coverage, including property insurance and liability coverage.
- Any other financial performance datafor the property, including historical rental income, expenses, and occupancy rates. Transparent financials inspire buyer confidence in the property’s income-generating potential.
5. Assess Market Rental Rates
Research the market and assess current market rental rates. When selling commercial property in South Florida, it’s important to know if your asset’s lease agreement is significantly behind the market, given that market rental rates have been skyrocketing. If your rental rates are below market, you can consider lease renegotiations on leases where possible or selling at a lower capitalization rate while marketing the value-add opportunity.
6. Offer Incentives for Lease Renewals
Leases that expire in the next year or two are perceived as a risk by buyers. If tenants have leases expiring soon, start by requesting they execute a lease renewal. If they seem hesitant, offer incentives to encourage a lease renewal. Long-term and secure leases are more attractive to most buyers.
7. Research Any Proposed Development or Infrastructure Developments
Upcoming infrastructure or development projects can significantly impact a commercial property’s value (positively or negatively). Research any planned developments in your chosen area—whether it’s a new transport hub, commercial complex, or residential project, these can affect property demand and pricing.
If your agent isn’t already aware of these projects, make them aware so they can include them in their marketing materials. While buyers want to see present value, they also want to be aware of future potential.
8. Resolve Legal and Title Issues
Any legal or title issues associated with a property will be a major deterrent to potential buyers. Even in a hot market, the associated risk of legal and title issues will send most buyers running. Resolve any issues before listing the property for sale so that you can be confident of a clean title report and quick closing.
9. Hire a Local Commercial Real Estate Expert
If you want to ensure selling commercial property in South Florida goes smoothly, it’s crucial that you engage a local expert commercial real estate broker who can navigate you through the process.
As your seasoned commercial real estate broker, the Martinez Team will:
- Compile supporting marketing documents and collateral.
- Provide projections of the investment’s potential.
- Conduct targeted marketing to buyers and their network.
- Add value through negotiation.
- Advise on property positioning to add value.
- Offer market insights.
- Assess the qualification of buyers.
- Assist in property documentation collection.
- Provide seamless transaction management.
- Assist you with leasing tips for your tenants or their leases.
The commercial real estate market in South Florida is a hotbed of potential. If you’re ready to start selling commercial property in South Florida, there’s never been a better time.
With the right guidance and strategies, you’re setting yourself up for a fantastic, high-yield return on your investment. The Martinez Team is here to guide you every step of the way. With our extensive knowledge, industry relationships, and a firm understanding of the local market, we will help you achieve the highest possible selling price.