Roughly 30 percent of commercial real estate transactions fall through during the due diligence period, according to industry data from 2024. The buyers who close successfully are not luckier. They follow a disciplined checklist that surfaces deal-killers early, when backing out still costs only time and a few thousand dollars rather than a seven-figure asset and a lawsuit.

In South Florida the stakes are higher than most markets. Shallow water tables, a patchwork of county and municipal zoning codes, and some of the steepest insurance costs in the country create risks that do not show up in national due diligence guides. This checklist covers the full scope of what you need to verify before you close on a commercial property in Miami-Dade, Broward, or Palm Beach County.

Key Takeaways

  • Negotiate a due diligence period of at least 45 to 60 days, and 60 to 90 for complex properties. Florida law sets no minimum.
  • Order a Phase I environmental assessment on every South Florida commercial acquisition. Florida's water table is only 3 to 15 feet deep, making contamination from tanks, dry cleaners, and auto shops spread faster than in most states.
  • Verify operating expenses from actual invoices, not seller-provided summaries. Property taxes and insurance in South Florida have risen sharply and can make historical expense ratios unreliable.
  • Confirm whether county or municipal zoning applies. Many South Florida properties sit in unincorporated areas under county code, not the adjacent city's code.
  • Review every tenant lease in full. Renewal options, rent escalation clauses, co-tenancy provisions, and exclusivity rights directly affect what you are buying.

How Long Should the Due Diligence Period Be in Florida?

Florida law does not set a mandatory due diligence period for commercial real estate. It is fully negotiated in the purchase contract. The Florida Bar and FAR commercial contract defaults to 30 days, but that is rarely enough time to complete everything on this list.

Standard practice for a straightforward commercial deal is 45 to 60 days. For anything with multiple tenants, environmental history, a complex capital structure, or a zoning question, push for 60 to 90 days. The earnest money deadline is hard. If you miss it without a written extension, you lose the right to cancel and recover your deposit. Build the inspection timeline into the contract before you sign it, not after.

Environmental Review: The Florida-Specific Risk You Cannot Skip

Florida's water table sits only 3 to 15 feet below the surface across most of South Florida. That geology makes contamination from underground storage tanks (USTs), former dry cleaning operations, and automotive shops spread faster into groundwater here than in almost any other state. The Florida Department of Environmental Protection regulates approximately 24,000 storage tank facilities and conducts over 11,000 inspections annually. Cleanup costs for a confirmed UST release range from $100,000 to over $1,000,000, and a buyer can inherit that liability regardless of when the contamination occurred.

A Phase I Environmental Site Assessment under the current ASTM E1527-21 standard covers database records review, a site inspection, and interviews with owners and operators. Cost runs $2,200 to $4,000 for a standard commercial property and takes 2 to 4 weeks to complete. More complex sites, former industrial properties or brownfields, can reach $7,500 or more. If the Phase I identifies a recognized environmental condition, you will need a Phase II, which involves soil and groundwater sampling and runs considerably more.

Red flags to watch before you even order the Phase I: prior use as a gas station, dry cleaner, automotive shop, printing operation, or any industrial tenant. Pull the county property appraiser records back at least 30 to 50 years and compare the land use history to what the seller discloses.

Coastal and near-coastal properties also carry FEMA Special Flood Hazard Area exposure. Commercial flood insurance in Zones AE and VE can cost $15,000 to $50,000 or more per year depending on location and building elevation. Get the elevation certificate before you model the numbers.

For more on how environmental and insurance costs are shaping South Florida commercial values, see our post on the impact of insurance premiums on South Florida property values.

Title and Survey: What to Order and What to Check

Every commercial acquisition needs both a title commitment and an ALTA survey. They work together. The title commitment reveals encumbrances, easements, and liens of record. The ALTA survey shows you physically where those encumbrances sit on the ground and whether the legal description matches reality.

Florida is a promulgated-rate state for title insurance, meaning the state sets the premium schedule and all title companies charge the same rate. An owner's title policy on a $2 million commercial property runs approximately $7,750 at standard rates. If the property was insured within the past three years, a reissue rate applies and saves 30 to 40 percent on the premium. Ask for it. It is your right under Florida law.

ALTA surveys under the 2026 ALTA/NSPS standards (effective February 23, 2026) now place additional adjoining-deed research responsibility on the surveyor, which adds a few percent to quotes compared to prior years. Budget $2,500 to $4,000 for a base ALTA and $3,000 to $8,000 when you add Table A items such as underground utility depiction, topographic data, and zoning setback notation. Large or multi-parcel properties can run $10,000 to $15,000.

Title red flags in South Florida include overlapping easements from utility companies, access disputes on non-dedicated roads common in unincorporated areas, and older deeds with unclear legal descriptions that predate modern surveys. Have your title attorney review the exception schedule in full, not just the commitment cover page.

Zoning and Permits: Confirm Before You Assume

South Florida's zoning structure is more complex than most markets because of the patchwork of county and municipal jurisdictions. Miami-Dade County alone has 34 municipalities, Broward has 31, and Palm Beach has 38. Many commercial properties sit in unincorporated territory where county code applies, not the adjacent city's code, even if the mailing address says otherwise. Confirm the governing jurisdiction with the county property appraiser before you pull any zoning report.

Miami uses Miami 21, a transect-based code that is fundamentally different from conventional Euclidean zoning used elsewhere. Unincorporated Miami-Dade uses a separate zoning code. Broward uses a Unified Land Development Code but municipal overlays are common. Palm Beach County's ULDC governs unincorporated areas but 44 municipalities each maintain their own codes.

Two pieces of state legislation deserve attention on any commercial acquisition right now. Florida's Live Local Act and its 2025 amendments allow residential and mixed-use development as-of-right on commercially and industrially zoned parcels under certain affordability and density conditions. The 2025 amendments also expanded the definition of commercial use. This can affect your intended use assumptions and your valuation of adjacent or competing properties. The 2025 Infill Redevelopment Act similarly allows residential development on commercially zoned parcels of five or more acres adjacent to residential zones in certain counties.

Beyond zoning itself, pull the permit history from the county building department. Unpermitted work on a commercial property does not automatically become the seller's problem at closing. In Florida, the buyer can inherit open or expired permits and the cost to close them out or bring the work up to code.

Tenant Lease Audit: Read Every Word

For any income-producing commercial property, the leases are the asset. A thorough lease audit covers these items for every tenant:

  • Lease term and renewal options: Confirm the expiration date, the number and length of renewal options, and whether those options are at market rate or fixed rate. Options at below-market rent cap your upside.
  • Rent escalations: Identify whether increases are fixed percentage, CPI-based, or flat. Understand the compounding effect over the hold period.
  • Lease type: Gross, modified gross, or NNN. In a gross lease, you pay operating expenses out of the rent. In a NNN, the tenant covers property taxes, insurance, and maintenance. Verify what the lease actually says against what the offering memorandum claims. They do not always match. For a deeper look at lease structures, see our piece on commercial lease negotiation tactics for South Florida landlords.
  • Co-tenancy clauses: Common in retail. If an anchor tenant leaves, co-tenancy provisions can allow other tenants to reduce rent or terminate early. These can make a retail strip center's income significantly less stable than it appears.
  • Exclusivity clauses: Restrict what other tenants you can bring into the property. A pharmacy tenant exclusivity can prevent you from leasing to a vitamin shop, a medical clinic, or a cosmetics retailer depending on how broadly it is written.
  • Assignment and subletting rights: Understand whether tenants can transfer their leases without your approval. Some older leases give broad assignment rights that effectively let a tenant sell your occupancy to a stranger.
  • Security deposits and letters of credit: Verify that deposits match what is in the lease and confirm the current holder. Security deposits held by the seller do not always transfer cleanly at closing without a specific provision in your purchase agreement.

Operating Expense Verification: Trust the Invoices, Not the Summary

Sellers provide trailing 12-month operating expense statements as part of the offering package. These are a starting point, not a final number. Request the actual invoices, utility bills, tax bills, insurance declarations, and service contracts for the past two to three years and reconcile them against what was reported.

South Florida has specific expense categories that inflate faster than national benchmarks. Property taxes across Miami-Dade, Broward, and Palm Beach have risen as assessed values climbed during the 2021 to 2024 run-up. The Homestead exemption does not apply to commercial property. When you buy, the assessed value often resets toward the purchase price, and your first year's tax bill can be materially higher than what the seller was paying.

Insurance is the other major variable. Commercial property insurance in coastal and near-coastal South Florida has become one of the largest line items for owners. Some properties have seen premiums triple since 2021. Get a fresh insurance quote from a South Florida broker before you close, not after. The seller's current rate is not a reliable guide to what you will pay.

As a benchmark, operating expense ratios in Florida by property type run roughly as follows: multi-tenant office on gross leases runs 45 to 55 percent of gross income; multi-tenant retail on gross or modified gross leases runs 30 to 45 percent; industrial on gross leases runs 20 to 35 percent; NNN single-tenant retail runs 5 to 10 percent because tenants cover most costs. Use these as a sanity check, not a substitute for line-by-line verification.

For context on current operating conditions across property types, our posts on South Florida industrial demand and office trends in Boca and West Palm Beach cover how each sector is performing right now.

Financial and Physical Property Review

Beyond leases and expenses, the following items belong on every commercial due diligence checklist:

  • Rent roll verification: Confirm actual rents collected against the lease amounts. Deferred rent agreements, side deals, or informal accommodations from the pandemic years still surface occasionally. Ask for bank statements showing rent deposits.
  • Capital expenditure history: Request a list of all major repairs and replacements in the past five years. Roof, HVAC, electrical, parking lot, and elevator systems that are approaching end of life are not always disclosed without being asked.
  • Property condition report: Hire a licensed commercial property inspector or engineer to produce a Property Condition Assessment (PCA). For larger assets, a full PCA under ASTM E2018 standards gives you a reserve analysis and deferred maintenance estimate.
  • Estoppel certificates: Request estoppel certificates from every tenant before closing. An estoppel is a signed statement from the tenant confirming lease terms, rent amount, the absence of defaults, and any claims they have against the landlord. It is legally binding and protects you if the tenant later contradicts what the leases say.
  • Service contracts: Identify all recurring service contracts: HVAC maintenance, elevator service, landscaping, pest control, security. Determine which ones transfer to you at closing and which require your consent to assign.

What to Expect From South Florida's Commercial Market Right Now

Understanding the current market helps you calibrate your due diligence findings. South Florida retail is historically tight, with vacancy around 3.2 percent region-wide, well below the national average. That low vacancy supports asking rents and reduces the risk of your income-producing assumptions being wrong, but it also means you are competing with other buyers who have similar information.

Industrial vacancy in Miami-Dade has softened from the pandemic-era lows, rising to around 7.7 percent with negative net absorption over the past 12 months. Cap rates for prime industrial in Miami are in the 5.0 to 5.3 percent range. Office in South Florida remains a relative outperformer against the national backdrop, with Miami-Dade vacancy near 16 percent while the national average exceeds 20 percent. Brickell Class A asking rents crossed $136 per square foot full service, and Miami Beach Class A crossed $100 per square foot for the first time.

For a broader look at how capital markets conditions are shaping commercial deals, see our post on how high interest rates are reshaping South Florida commercial real estate. If you are comparing markets within the region, our analysis of Broward County versus Palm Beach County is coming soon.

If you are actively searching for commercial listings or need a platform to manage listings, leads, and deal flow in South Florida, browse current Miami listings, Fort Lauderdale listings, or West Palm Beach listings on ConnectLinx.