Florida’s Next Chapter: Growth Fueled by Tax Reform and Business Migration

In a move that’s set to reshape Florida’s commercial real estate landscape, Governor Ron DeSantis signed House Bill 7031 into law on June 30, 2025, effectively repealing the state’s sales tax on commercial leases starting October 1, 2025. This reform eliminates the remaining 2% state sales tax on rentals of commercial properties, including offices, retail spaces, and warehouses, a tax that had been gradually reduced from higher rates over the years. For businesses and property owners, this means lower operational costs and a more competitive environment, particularly in high-growth areas like Miami and Allapatha. But this is just one piece of a larger puzzle, as the governor eyes even more ambitious tax cuts that could transform the state’s economy and real estate market.

SUNLAND MARKET RESEARCH

BY Jaden Duxfield

THE COMMERCIAL LEASE TAX REPEAL: ANOTHER INCENTIVE FOR BUSINESSES TO MOVE TO FLORIDA

Florida was the only state in the U.S. to impose a statewide sales tax on commercial leases, which added an extra layer of expense for tenants and landlords alike. The tax, which applied to payments for leasing real property used for business purposes, had been on a downward trajectory since 2017, dropping to 2% as of June 1, 2024. Now, with its full repeal, commercial tenants will no longer have to factor this cost into their budgets, potentially saving thousands annually depending on lease sizes.

This change couldn’t come at a better time for Florida’s real estate sector. Commercial property owners can now offer more attractive lease terms without the tax burden, which should stimulate demand for space in key markets. For investors, it reduces friction in transactions and could lead to higher occupancy rates and property values over time. But perhaps the most exciting impact is on business relocation trends, especially in vibrant hubs like Miami.

MIAMI’S BUSINESS INFLUX: ACCELERATED BY TAX RELIEF

Miami has already emerged as a magnet for businesses relocating from high-tax states like New York and California, with a surge in corporate moves between 2023 and 2025. The city has seen an influx of tech, finance, and fintech firms, drawn by Florida’s no-income-tax policy, sunny climate, and pro-business environment. Notable relocations include industry giants like Citadel, which moved its headquarters to Miami, alongside firms such as Blackstone, Goldman Sachs, and LexerX. 

In 2024 alone over 500 businesses relocated across multiple sectors. According to Florida’s Chamber of Commerce, in 2024 alone, Florida netted over 500 business relocations across sectors, with companies like Playboy who earlier this year put out a statement that they too are moving their head-office to Miami stating the ‘business-friendly’ environment.

This trend has supercharged Miami’s commercial real estate market, with rising demand for office and retail spaces in areas like Brickell often dubbed the “new Silicon Valley”. The repeal of the commercial lease tax is poised to amplify this momentum. By eliminating that extra 2% cost, businesses especially startups and mid-sized firms will find it even more affordable to set up shop in Miami. This could lead to a fresh wave of relocations, further boosting local job creation, population growth, and demand for commercial properties. Real estate investors should watch for increased leasing activity in high-profile districts, potentially driving up rental rates and property valuations as supply tightens.

GOVERNOR DESANTIS’ PUSH TO ELIMINATE PROPERTY TAXES: MOTIVATIONS AND IMPLICATIONS

Building on the success of the lease tax repeal, Governor DeSantis is advocating for an even bolder reform: placing a constitutional amendment on the 2026 ballot to reduce or potentially eliminate property taxes on homestead properties. This proposal follows earlier measures, such as a $1,000 property tax rebate for homeowners announced in March 2025, aimed at offsetting school-related taxes while maintaining funding for districts.

DeSantis’ rationale is rooted in providing substantial relief to Florida families amid rising living costs and inflation. He argues that high property taxes burden homeowners, discourage long-term residency, and hinder economic mobility. By phasing out or abolishing these taxes, potentially replacing them with alternative revenue sources like sales taxes or state funds the governor aims to make Florida the most homeowner-friendly state, attracting more residents and businesses while stimulating consumer spending.

Economically, this could be transformative. Lower or zero property taxes would free up disposable income for households, boosting local spending on goods, services, and real estate. It might also draw retirees, remote workers, and entrepreneurs to the state, fueling population growth and job creation. However, critics warn of potential shortfalls in funding for essential services like schools, roads, and public safety, which rely heavily on property tax revenue, prompting debates on sustainable alternatives.

For the real estate market, the implications are profound. Eliminating property taxes could significantly increase home affordability, driving up demand and property values, especially in desirable areas like Miami. Sellers might see quicker transactions and higher prices, while buyers, particularly first-timers, could enter the market more easily. Commercial real estate could benefit indirectly through a stronger overall economy, with more businesses expanding due to a growing consumer base. Yet, if local governments raise other fees to compensate, it might temper some gains. Overall, this proposal positions Florida as a low-tax haven, potentially accelerating the state’s real estate boom.

LOOKING AHEAD: A BRIGHTER FUTURE FOR FLORIDA REAL ESTATE

Florida’s commercial lease tax repeal is already a win for businesses and real estate stakeholders, with Miami poised to reap outsized benefits from continued corporate relocations. If DeSantis’ property tax elimination plan gains traction in 2026, it could usher in an era of unprecedented growth, making the Sunshine State even more irresistible for investors and residents alike. As these reforms unfold, stimulate a lot of growth opportunities for companies moving to the state, where migration numbers should increase creating heightened demand for homes within the state.