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As of October 1, Florida officially eliminated its 5.5 % sales tax on commercial leases, cutting tenant costs by nearly $900 million annually. The reform instantly boosts NOI across the state and is expected to drive further cap-rate compression as institutional capital pours into Miami, Orlando, and Tampa.
📊 Quick Dive
Lease-tax savings = ≈ 25–50 bps effective cap-rate lift for landlords.
GDP growth steady at ~2.7 % (2025 f); population + 1.7 % YoY.
Lenders tightening spreads for prime Florida assets as credit outlook improves.
NYC Office Leasing Hits 19-Year High as Firms Rush for Space
Manhattan tenants leased 23.2 M SF through Q3 — the strongest Jan–Sept total since 2006 and above pre-COVID levels, even as U.S. office leasing sits ≈ 11 % below average. Tech, finance, and media firms are leading the return-to-office surge, locking in high-end space before rents climb. Trophy leases above $100 /SF already exceed 2024 totals, and at least six new projects have restarted — the most since 2020.
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Houston Retail Landlords Hold Firm on High Rents Amid Low Vacancies
Houston retail remains a landlord’s market. Asking rents average $20.51 /SF (NNN) — near record highs — with vacancy steady at 5.6 %. Leasing hit 1.8 M SF in Q3, while new supply plunged 41 % YoY to 0.7 M SF. Strong in-migration and experiential tenants (pickleball, gyms, breweries) are absorbing backfill space, keeping occupancy tight and concessions minimal.
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San Francisco Offices Sell at Deep Discounts as Investors Bet on a Rebound
Distress pricing is drawing opportunists back to the Bay. Downtown assets now trade at 60–80 % discounts to pre-COVID values; the historic 800 Market St. closed for $17.2 M ($344 /SF) — over 60 % below its prior basis. Vacancy remains ~31 %, yet buyers are wagering on eventual tech-sector recovery and office-to-residential conversions.
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Capital is flowing to clarity, quality, and cost advantage.
Florida’s tax repeal provides structural yield; New York’s surge proves leasing momentum follows amenities and credit; Houston demonstrates supply discipline; and San Francisco shows price discovery still in progress.
For operators, the playbook is precision underwriting — favor tax-efficient, high-absorption markets; demand credit tenancy in gateway offices; and keep cap-ex focused on competitiveness. Liquidity is returning, but it’s rewarding fundamentals, not optimism.
Policy Tailwinds: Florida’s reform could pressure peers to reconsider CRE-related taxes by 2026.
Flight-to-Quality: Expect the rent premium between Class A and B offices to widen another 5–8 points YoY.
Retail Durability: Tight supply markets like Houston likely see modest (1–2 %) rent gains into 2026.
Distress Cycle: More West-Coast note sales and conversions expected through mid-2026.
Rates & Liquidity: If the 10-year holds < 5 %, Q4 could open a narrow refinancing window for Class A assets.
