Top Income-Producing Commercial Properties in the Florida Keys

Profiting in Paradise: Investing in Commercial Real Estate in the Florida Keys

The Florida Keys are more than just a tropical paradise—they’re a strategic investment opportunity for those looking to capitalize on the area’s booming tourism and chronic housing shortages. Whether you're eyeing a boutique hotel in Key Largo or a multifamily property in Marathon, the Keys offer an unmatched combination of high demand, limited supply, and consistent income potential.

📈 Tourism Snapshot: From Key Largo to Key West

Tourism is the lifeblood of the Florida Keys economy. In 2024, the region welcomed approximately 5.1 million visitors, with Key Largo attracting around 973,500 of them. The remaining 4.14 million visitors explored destinations like Islamorada, Marathon, and Key West.

Here's a breakdown of tourism across the Keys:

• Key Largo & Islamorada (Upper Keys):
  As the gateway to the Keys, Key Largo and Islamorada receive over 2 million visitors annually, drawn by world-renowned diving, fishing tournaments, and proximity to Miami. These areas see strong mid-range hotel occupancy with increasing demand for boutique, waterfront, and short-term rental options. During high season, the average daily rate for upper keys hotel prices can reach $712, while in the low season, it averages around $381.
• Marathon (Middle Keys):
  Marathon’s central location and access to boating, marinas, excessive short term vacation rental zoning, and family-friendly attractions like the Turtle Hospital and Aquarium Encounters make it a top choice for vacation rentals. The city reported hotel occupancy rates consistently above 70% year-round, with ADR (Average Daily Rate) surpassing $275 during peak season.
• Key West (Lower Keys):

The crown jewel of Florida Keys tourism, Key West draws over 2.5 million annual visitors, despite being just 4 miles long. The island maintains some of the highest ADRs in the state, with averages ranging from $350 to $600+ per night, especially in the luxury and historic inn segments. Occupancy rates remain over 80% annually, with consistent foot traffic from cruise ships, International airport, festivals, and iconic landmarks like Duval Street and Mallory Square.

🚢 Key West: Cruise Ships and Airport Traffic Fueling Tourism

Key West's tourism is significantly bolstered by its cruise ship port and airport:

• Cruise Ship Visitors:
  In 2024, Key West is expected to welcome approximately 458,700 cruise passengers across 170 cruise ship calls .
• Key West International Airport (EYW):
  The airport has seen substantial growth, with 1,449,649 passengers in 2024, up from 1.3 million in 2023 . This increase underscores the island's appeal and the importance of air travel in sustaining tourism.

🏠 The Multifamily Market: High Demand, Limited Supply

The housing market in the Keys is characterized by high demand and limited supply, leading to elevated rental prices:

• Key Largo:
• 2BR/1BA long-term rental: $2,300–$3,400/month
• 3BR+ waterfront or updated units: $3,800–$5,500+/month
• Islamorada:
• 2BR rentals often exceed $3,200/month
• Luxury or canal-front units can fetch $6,000+/month
• Marathon:
• 2BR apartments range from $2,500–$3,500/month
• Whole-home rentals for workforce or long-term tenants: $4,000–$6,500+/month
• Key West:
• 1BR units routinely rent for $2,800–$3,200/month
• 2BR+ homes: $3,500–$6,500+/month, depending on location and amenities
• Duplex and triplex owners often generate $8,000–$12,000+ monthly from fully leased buildings

🔑 Why Commercial Investors Are Turning to the Keys

The Florida Keys aren’t just a beautiful escape—they’re a high-barrier, high-demand investment market with serious long-term upside. Here’s why seasoned commercial investors are increasingly targeting the Keys:

✅ 1. Limited Inventory = Strong Appreciation Potential

The Florida Keys are geographically limited—stretching just 120 linear miles of island chain—and development is tightly controlled by Monroe County’s Rate of Growth Ordinance (ROGO), which restricts how many building permits are issued each year. This scarcity drives long-term appreciation. For example:

• The average commercial land sale price in the Keys has increased steadily over the past 5 years.
• ROGO allocations are now prioritized for affordable housing or critical infrastructure, making new hotels or multifamily projects extremely rare and valuable.

✅ 2. Year-Round Cash Flow from Tourism & Rentals

Unlike many seasonal markets, the Florida Keys benefit from year-round tourism, especially in Key West, Marathon, and Islamorada. This ensures continuous demand for hospitality accommodations and long-term rentals.

• Hotel occupancy rates in Key West average over 82% annually.
• Average Daily Rates (ADR) exceed $400/night in many areas, making boutique hotels and motels highly profitable with relatively low overhead.
• Vacation rentals and transient-licensed properties offer 2–3x the income of traditional annual leases, depending on location and amenities.

✅ 3. Workforce Housing Demand Creates Multifamily Opportunities

The Keys face a significant housing shortage for local workers, teachers, first responders, and service staff. Monroe County is actively seeking creative solutions, which puts small and midsize multifamily owners in a strong position.

• The vacancy rate for long-term rentals is consistently under 3% in most municipalities.
• Rents have risen 20–35% in the last three years in markets like Islamorada, Key West, and Marathon.

✅ 4. Tax Advantages & Strong Cap Rates

Florida remains a no-state-income-tax state, and investment properties in the Keys often carry favorable cap rates compared to mainland Florida due to nightly rental premiums and limited operating competition.

• Average cap rates for smaller motels and multifamily buildings range from 5.5%–8%, depending on the property type and location.
• Cost segregation studies and depreciation strategies can help offset gains, especially for investors using 1031 exchanges or pairing with seller financing.

✅ 5. Lifestyle Value + Generational Wealth

Buying in the Keys isn’t just about the return on investment—it’s also about legacy. Many investors use these properties:

• As vacation homes during off-peak seasons, blending lifestyle and business;
• As part of a multi-generational estate plan, securing assets in one of Florida’s most exclusive and resilient markets.

Whether you're purchasing a waterfront motel in Marathon, a mixed-use retail building in Islamorada, or a multi-unit property in Key West, these investments offer a blend of stability, cash flow, and long-term growth potential that’s difficult to find elsewhere.

Ready to Explore Investment Opportunities?

From turn-key motels with dockage to value-add multifamily properties with expansion potential, I specialize in helping investors identify and acquire high-performing commercial real estate in the Florida Keys. Let’s connect and turn your next investment into your greatest asset—in a place where the sun shines on your profits!