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By Robert Gordon, Esq. Wisconsin tax law requires assessors to assess real estate at its fair market value. Whenever possible, that value must reflect recent sales of reasonably comparable property. Longstanding Wisconsin Supreme Court decisions have held that real estate cannot be assessed based on an imaginary or hypothetical market, or at its intrinsic value to the current owner, if that value differs from fair market value. Under those decisions, real estate can only be assessed at what market evidence indicates a third party would pay for the property in the open market. In the recent case of a specialized plant, the Wisconsin Supreme Court rejected the property owner’s argument that the plant was assessed at its intrinsic value to the owner’s manufacturing business and not at its fair market value as real estate. The background The plant was built to manufacture a highly specialized food product, using a process regulated by the U.S. Food and Drug Administration. The manufacturer incorporated unique real estate features — at tremendous cost — to meet FDA standards. These included a spray dryer more than 100 feet tall housed in an 8-story tower, as well as concrete surfaces specially treated to eliminate any air …

Savannah Duncan Though Atlanta is still recovering from The Great Recession, there are signs of life in the market as several development and redevelopment projects are underway. “We lost a significant number of jobs and Georgia suffered more bank failures (79) than any other state in the nation,” said Amanda Rhein, senior project manager of redevelopment at Invest Atlanta, the official economic development authority for the City of Atlanta. “We’ve come a long way and are really happy to finally start talking about some positive developments.” Rhein’s comments came last Wednesday at the Urban Land Institute’s “Development — Here We Go Again!” panel. The discussion, which was moderated by Rhein, included Steve Baile, senior vice president of Atlanta operations at Daniel Corp.; Ben Brunt, principal with Noble Investment Group; Eric Weatherholtz, co-founder of Healey Weatherholtz Properties, and Bob Voyles, CEO of Seven Oaks Co. Each panelist took the opportunity to discuss a development project that is currently underway or planned in the city of Atlanta. 77 12th In Midtown, Daniel Corp. is currently working on the $82 million 77 12th, a mixed-use retail and residential development located on the corner of 12th Street and Crescent Avenue. Northwestern Mutual is the …

By Karla Zens As the real estate market warms up in the Southeast and across the U.S., dollar stores retain their red-hot appeal with real estate investors. Dollar stores — such as Dollar General and Family Dollar — gained shoppers during the economic downturn and have maintained popularity, even attracting new demographics. They’ve done so by improving their merchandise to include more name brands, adding more food and drug options, upgrading and renovating existing stores and, of course, building new stores at a record pace. The smaller footprint of dollar stores makes them more manageable and faster to navigate than their big-box brethren. As sales and target audiences have grown, dollar stores have entered more desirable Southeast markets with better demographics. Based on this success, as well as the relative lack of inventory in the market, cap rates for dollar stores have continued to fall in 2012. In the case of Dollar General, factors compressing cap rates include recent credit hikes, a low price per square foot, small price points, the transition to a triple-net, 15-year corporate lease, and the availability of new financing. Investors are also gaining confidence that they could replicate the rent if a dollar store were …

Matthew Ward The Chicago downtown office market is on a roll. Vacancies have fallen for more than 12 months straight as corporations pull the trigger on new or rehabbed office space in marquee locations to accommodate consolidation and growth. One of the big stories is that the market is far more geographically diverse today. We are seeing the suburban sprawl in reverse as corporations leave far-flung business parks to seek out trendier 24-hour neighborhoods such as River North (Chicago’s tightest submarket), the West Loop and the Millennium Park/East Loop-area. Where you work is also increasingly where you live. Chicago’s 136.7 million-square-foot office CBD market reported a 14.9 percent vacancy rate at the end of the first quarter, a welcome decline from the 15.4 percent reported during the fourth quarter of 2011. According to CBRE Group, downtown vacancy has fallen in every quarter since the end of 2010, when the rate was 17 percent. It peaked at 17.3 percent midway through 2010. Overall vacancy numbers include sublease space. Direct vacancy was 13.6 percent in the first quarter of 2012, down from 14 percent in the prior period. Compare that to the suburbs, where the first-quarter vacancy rates rose to 24.6 percent …

Interview by Matt Valley The retirement of Julian Diaz as chair of the Department of Real Estate at Georgia State University and on June 1 capped a fulfilling 25-year career as an educator. The native Georgian’s relationship with GSU actually began much earlier — in 1971. To financially support his way through school, Diaz worked in a lithography shop in downtown Atlanta during the day before walking over to the campus to attend afternoon and evening classes. During this time, he also started doing some computer programming for his father’s appraisal company, which eventually evolved into a full-time position as an appraiser. Diaz graduated with an undergraduate degree in real estate from GSU in 1975 and later earned a master’s degree in business administration, with a focus in real estate and finance, from the University of Georgia. He returned to GSU in 1983 as a doctoral student and graduated with a Ph.D. in business administration, with a focus in decision sciences, in 1987. After teaching statistics for a few years at Georgia College in Milledgeville, Georgia, he accepted a temporary appointment at GSU, was later promoted and awarded tenure and became the chair of the real estate department in 2005. …

Nellie Day LAS VEGAS — While big-box real estate certainly hasn't vanished entirely, it's clear some of its biggest players are employing a variety of different “out-of-the-box” strategies to get deals done. With the popularity of online retailers and a fickle consumer base that can vary by region or even city, a number of companies are turning their attention away from the mega spaces to provide more personalized, intimate shopping experiences. “We are facing unprecedented change in the retail landscape,” said Mike LaFerle, vice president of real estate construction for Home Depot. “Customers buy when they want, and they want it quickly and they want to be guaranteed they're getting the best product and the best pricing.” His comments came on Monday, May 21 at ICSC RECon 2012 during a panel discussion on the evolution of big boxes. This sentiment further bolsters the online arena, where consumers can easily compare prices and purchase products without leaving home. Panelists, including LaFerle, Carl Muller, vice president of real estate and design of Walmart Stores, and Marci Troutman, founder and CEO of SiteMinis, were keenly aware the physical landscape was losing traction to companies that dealt primarily in the virtual arena. “Five years …

Jim Periconi and Abigail Jones Since 2007, the Bloomberg administration has been pushing New York City to be “greener and greater” through the implementation of PlaNYC. PlaNYC recognizes that in order for the city to thrive, it must accommodate a growing population, invest in and maintain its infrastructure, enhance its economic competitiveness, and improve the quality of its air and water, while reducing the city's contributions to the greenhouse gases that cause climate change as well as preparing for its effects. A significant part of PlaNYC requires more green building in the city. In New York City, energy used in buildings accounts for 75 percent of the greenhouse gas emissions and 85 percent of the water use. Green buildings use energy and water more efficiently, contain fewer toxic materials and contribute to an improved outdoor environment by increasing vegetation, combating urban overheating, and managing stormwater. As part of PlaNYC, Mayor Michael Bloomberg and City Council Speaker Quinn charged the Urban Green Council, the New York City Chapter of the U.S. Green Building Council, to establish a group of industry leaders to identify impediments to green building in the city's codes, and recommend cost-effective code enhancements or new green building code …

Carrie Smith It’s certainly no secret that Florida has experienced one of the nation’s slowest economic recoveries during the past year. According to the Bureau of Labor Statistics, the unemployment rate in Florida in March stood at 9 percent, well above the national average. Still, there are signs of recovery and indications of what the state’s consumer demand will look like as the state moves toward a “new normal.” Smart retailers and shopping center owners are quickly understanding the key traits of consumer behavior in 2012, and adjusting their offerings to match. Restaurant growth is taking off around Florida, led by chains that can leverage name recognition and the marketing support of a major brand. Many consumers seem more than happy to spend major portions of their discretionary income at restaurants despite having many other entertainment options. In the past, restaurants often looked to take over failed locations that had equipment they could recycle. But in this cycle of growth, the chains are laser-focused on top-grade locations and more than willing to spend money on new facilities. Retailer reinvention But while consumers spend money at restaurants, it appears they are less willing to open their wallets for full-priced clothing. This …

Douglas S. John While big box retailers such as Walmart, Kohl’s, Lowe’s, and The Home Depot are performing relatively well, the big box business model of providing customers with a nationwide network of large stores, a wide variety of products, and low prices may be slowing down. While some big box spaces are being re-tenanted by large-format retailers, owners are often converting stores for second-generation users such as call centers, educational facilities, medical offices and gun ranges. While these changes are ominous for property owners, the silver lining is that there is a significant opportunity to reduce their tax liability. The following key concepts, based on the income capitalization, cost, and sales comparison approaches to value, will help taxpayers and their attorneys ensure they are fairly taxed. Changing Lease Terms Erode Value Where state law requires assessors to value property using fee-simple assumptions of market rent, rather than contract rent, it is critical to explain to assessors how market conditions affect lease terms and property values. Colliers International’s white paper, “Re-Tenanting Bankrupted Big Boxes; Paving the Way for Retail’s Rebound,” outlines landlords’ challenges. To boost occupancy and retain tenants, landlords are slashing lease rates. Asking rents for replacement big box …