Real property leases are taxed on base rent as well as other payments tenants must make as a condition of their occupancy. This includes common-area maintenance fees, property taxes and utilities payable by the tenant as outlined in the lease.

In addition to the state tax, the property owner is required to collect from tenants any county-imposed local-option sales surtax on the total rent charged.  In Hillsborough County, the surtax is 2.5% bringing the total sales tax to 8%.  In Pinellas, Polk, Lake, Manatee, Sarasota and Pasco Counties the surtax is 1%, bringing the total sales tax to 6.5%.

These sales taxes are not typically included in the rental rates quoted by landlords.  As the sales tax is not insignificant, it’s very important for commercial tenants to include sales taxes when preparing annual budgets.

Mobiliti CRE specializes in representing tenants with expansions, contractions, renewals, and moves.  We would be happy to assist you with your commercial real estate requirements.  Contact us today at 813-300-2227 or via email at pam@mobiliticre.com.

The post Reduction in Florida Sales Tax Rate on Commercial Lease Payments appeared first on Mobiliti CRE.

Rental Rates and Percentage Rent Increases

In Popular Office Submarkets in the Tampa Bay Area.

Source – CoStar Group – CoStar is the premier provider of information, analytics and marketing services to the commercial real estate industry.

At Mobiliti CRE we routinely save our commercial real estate clients time and money by locating viable options and negotiating the best possible terms whether it involves a new lease or a renewal. Don’t wait until you receive a lease renewal offer from your landlord to consider your options.

Contact Mobiliti CRE today for a free lease review. Call Pam Pester at (813) 300-2227 or email pam@mobiliticre.com

The post 2019 Tampa Bay Commercial Real Estate Rental Rates and Increases appeared first on Mobiliti CRE.

What is a sale leaseback?

A sale leaseback occurs when a business sells a building that it owns and occupies to an outside investor and simultaneously enters into a long-term lease agreement with that investor/purchaser.

What type of companies and properties are good candidates for a sale leaseback?

• Single tenant properties.
• Most commercial real estate property types (medical, office, retail, and industrial).
• Companies with a healthy balance sheet and long, proven operating history.
• Companies willing to enter into at least a ten-year lease at market rates (longer leases increase value).
• Companies willing to enter into a triple net lease with the tenant responsible for all operating expenses.

What are the benefits of a sale leaseback to the user/seller?

• Converts a non-liquid real estate asset to cash while the user retains control and use of the property.
• Avoids the costs associated with placing conventional debt financing on the real estate.
• Allows the user to effectively depreciate the land because the lease payments cover the use of the land and the building. The lease payments are tax deductible.
• Improves the companies’ debt to equity ratio by removing debt that was associated with the real estate from the companies’ balance sheet and replacing it with cash.

What are the disadvantages of a sale leaseback to the user/seller?

• The user gives up any future property value appreciation.
• The user loses the ability to sell the real estate as part of a subsequent sale of the business.
• The tax impact resulting from the sale may be substantial if the property has been owned for a long period of time.

If you are considering a sale leaseback please reach out to Mobiliti CRE for assistance in valuing the property, structuring the lease and marketing the property.  We can be reached at 813-300-2227 or feel free to email pam@mobiliticre.com.

The post Should your Company Consider a Sale Leaseback to Access Cash? appeared first on Mobiliti CRE.

PROS

• Costs Remain Stable and Predictable – Leasing costs involve a predictable periodic outlay of cash. There are no surprise expenses.
• Flexibility to expand, contract and move as business conditions and needs change.
• Source of Financing – Leasing provides 100% financing while most borrowing requires a down payment.
• Additional Tax Deductions – Lease payments are fully tax deductible and reflect rent paid for both the land and structures. An owner of real estate cannot deduct the land portion of the investment.  In a triple net lease, the tenant can also deduct operating expenses.
• Financial Flexibility– Leasing frees up cash that can be used to invest in the business for things such as inventories, salaries, and equipment.
• Location – Leasing allows a tenant to be in a premier location that they might otherwise not be able to afford.
• Technology – Leasing allows a tenant to respond to technological changes quickly giving them the ability to move to a more high tech building.
• No Repairs or Maintenance – While you may be responsible for keeping carpets and interior spaces clean, but the landlord will need to keep the building in good repair.

CONS

• Appreciation – Tenants cannot take advantage of property appreciation.
• Control – Leasing does not allow control of other tenants. In a multi-tenant property, new neighboring tenants might not conform to the image the lessee is trying to project or may simply be “bad neighbors”.
• Cost – Businesses with strong earnings, good access to financing, and the ability to take advantage of the tax benefits of ownership, leasing is often a more expensive alternative. Individuals and small firms often find that the costs of leasing and buying are relatively equal.
• Alterations – The building owner may want to make cost-saving alterations benefiting the landlord that may disrupt the tenant’s business.
• Operational Control – Tenants have no control over amenities, management personnel, etc.
• Equity – At the end of a long term lease, the tenant walks away with nothing while an owner would have been building equity in the space.

Any tenant or business owner considering whether to lease or purchase commercial real estate, in Tampa Bay and the surrounding areas, should consult a commercial real estate agent.  A competent real estate agent can perform a detailed lease versus buy analysis to assist you, the client, in making the most cost-effective solution.

If you have questions regarding the decision to lease versus purchase commercial real estate in Tampa Bay, Florida please contact Pam Pester Esq., CCIM, President at Mobiliti CRE, pam@mobiliticre.com, (813) 300-2227, www.mobiliticre.com.

The post Pros and Cons of Leasing Versus Buying Commercial Real Estate appeared first on Mobiliti CRE.