By Steve Nowak, Siegel Jennings Co. A recent decision from an Ohio appeals court highlights a developing and troubling pattern in the state’s property tax valuation appeals. In a number of cases, an appraiser’s misuse of the highest and best use concept has led to extreme overvaluations. Given its potential to grossly inflate tax liabilities, property owners and well-known tenants need to be aware of this alarming trend and how to best respond. In the recently decided case, a property used as a McDonald’s restaurant in Northeast Ohio received widely varied appraisals. The county assessor, in the ordinary course of setting values, assessed the value at $1.3 million. Then a Member of the Appraisal Institute (MAI) appraiser hired by the property owner calculated a value of $715,000. Another MAI appraiser, this one hired by the county assessor, set the value at $1.9 million. The average of the two MAI appraisals equals $1.3 million, closely mirroring the county’s initial value. Despite the property owner having met its burden of proof at the first hearing level, the county board of revision rejected the property owner’s evidence without analysis or explanation. The owner then appealed to the Ohio Board of Tax Appeals (BTA). …
By Sydney Bardouil, Esq. If you own or manage real property in the District of Columbia and are wondering why your real estate tax bill has gone up in recent years, you are not alone. One common culprit is rising assessed value, but that may not be the main or only source of an increase. A less obvious contributor may be a new, different, or incorrect tax rate. Since tax rates vary greatly depending on a property’s use, staying diligent when it comes to your real estate’s tax class and billed rate is critical. The District of Columbia applies differing tax rates to residential, commercial, mixed-use, vacant and blighted properties. Why is this important? Because the classification can make a considerable difference in annual tax liability – even for two properties with identical assessment values. For example, a multifamily complex assessed at $20 million incurs a tax liability of $170,000 per year while the same property, if designated as blighted, incurs an annual tax liability almost twelve times greater at $2 million. Therefore, the assessed value is just one piece of the puzzle. Keeping a sharp eye on a property’s tax bill for the accuracy of any tax rate changes …
By Rachel Duck, director and senior property tax consultant at Popp Hutcheson LLP, the Texas member of the American Property Tax Counsel Property taxes are big news in Texas. Last year, property taxes were a primary focus of the 86th Legislature, and Texas Gov. Greg Abbott deemed property tax relief so important that he declared it an emergency item. The 2019 legislative session produced significant modifications to tax law. Here’s a rundown of the most noteworthy changes affecting taxpayers in 2020, along with a look at how fallout from the COVID-19 pandemic may complicate the taxpayer’s position. Removing The Veil Property taxes are not only big news, but they are also confusing, particularly given the “Texas two-step” appraisal and assessment process. After an appraisal district values a property, taxing entities separately tax that property based upon the final determined value. For a single property, a taxpayer may owe five or more taxing entities spread among three assessors’ offices. Understanding the ultimate tax liability for such a property can be a monumental task for taxpayers. Senate Bill 2 addressed the confusion and promoted transparency and truth in taxation, earning it the title of “The Texas Property Tax Reform and Transparency Act …
By Ray Balfanz, Outlook Management Group What does Milwaukee bring to mind? Beer? Cheese? TV’s “Happy Days?” Perhaps the city chosen as the site for the 2020 Democratic National Convention? Yes, that’s us — being recognized and happy about it. But since I began penning this piece in March, we’ve experienced a world of change in the realities of group gatherings: we can hardly have 10 people in a group now, let alone thousands of delegates filling our new Fiserv Forum. It’s anybody’s guess how long the multi-trillion-dollar brick-and-mortar retail industry will be effectively shuttered and how the industry will have changed when it’s over. So without a crystal ball, I’m sharing Milwaukee’s story of how our retail developments have kept relevant for our consumers, while hoping for the best possible outcome once we’re on the other side of this coronavirus pandemic. “A great place on a great lake” our tourism slogan once proclaimed — and indeed it is. Milwaukee is a largely undiscovered gem with excellent quality of life and endless spots at which to spend your hard-earned cash: a prolific culinary scene, first-rate arts offerings and vibrant retail. From the reimagined Drexel Town Square, to redeveloped Bayshore, to …
The outbreak of the COVID-19 virus has led to an economic crisis that is forcing office users across the region to make tough choices to continue their operations. While New York has been the epicenter of the virus, reporting nearly a third of the more than 1 million confirmed cases in the entire country, companies across the region have been forced to furlough employees and reassess their short-term needs for space. The nature of traditional office work was already changing before the virus, as mobile technology has allowed more flexible collaboration from home and co-working offices. Lessons learned from the virus, including the need for social distancing, will carry into whatever market conditions follow. Some companies may desire larger office spaces to allow wider distances between employees, while other may forgo physical space in favor of the mobile model. As a result of the health crisis, office brokers are working to help their landlord and tenant clients find common ground as they tentatively move forward with leasing agreements. Northeast Real Estate Business recently caught up with three veteran brokers to gain their insights into how the virus has impacted their office markets. Below are edited responses from Joshua Levering, senior …
By Kenneth Blomsterberg, Senior Managing Director of Investments, Marcus & Millichap Reno recorded robust job creation last year. This was bolstered by corporate growth at the Tahoe-Reno Industrial Center in Sparks, which houses Tesla’s Gigafactory, Apple and Switch data centers, in addition to a collection of fulfillment and distribution centers. The standout pace of employment growth supported the strongest rates of net migration and household formation this cycle, increasing local housing demand. With an average mortgage payment for a single-family home hovering around $2,100 per month throughout last year, leasing was the preferred choice among new residents despite rapidly rising rents across all apartment classes. In response, developers finalized 1,350 units in 2019, building on the 1,400 rentals delivered in 2018. Completions during the two-year span were concentrated in southern Reno neighborhoods and Sparks. These are areas where new supply has been well received, evidenced by the submarkets’ low 4 and mid-4 percent Class A vacancy rates as we entered 2020. Investors were also active during the past 12 months, motivated by solid economic growth and historically tight Class C vacancy. Significant demand was registered from outside value-add investors, with California-based buyers accounting for roughly half of total deal flow. …
As COVID-19 disrupts the American economy, healthcare system and way of life, retailers and restaurants — the commercial real estate users whose very profitability and essence thrive on social congregation — have already been pegged as immediate casualties of war. According to data from the U.S. Department of Commerce, total U.S. retail sales fell by 16.4 percent between April and March, well above the projected drop of 12.3 percent. And specifically within the Lone Star State, the Texas Restaurant Association issued a statement in mid-April warning that as much as 40 percent of the state’s restaurants could remain permanently closed as a result of the pandemic. The month of May has seen Texas emerge as a national trendsetter for reopening retail and restaurant businesses. Texas Gov. Greg Abbott granted restaurants and malls permission to begin reopening on May 1, followed by gyms, bars and bowling alleys during the week of May 18 to 22. All establishments were required to reopen at limited occupancies. But even prior to the pandemic, landlord and tenants in brick-and-mortar retail were already engaged in a vicious battle against e-commerce. The introduction of COVID-19 has not changed physical retailers’ need to be aggressive, but it has …
The impact of COVID-19 has forced retailers, restaurants and service providers in the Northeast to improve their digital channels and adapt social distancing policies to continue serving customers. With retailers struggling to pay rent, landlords could find mutual benefit in reaching a compromise with existing tenants before temporary closures become permanent. Unfortunately, for many small businesses the virus has activated a Darwinian battle of the fittest among retailers with primarily physical channels. Meanwhile, e-commerce giants like Amazon are thriving in market conditions tailored to their already digital-focused business plans. Grocery stores and pharmacies have also found themselves to be arguably the most essential of services during the outbreak, as many have struggled to keep fresh food, toilet paper and other supplies on their shelves. But even after medical professionals and politicians give the “all clear” to reopen the economy completely, it is still unclear when consumers will feel comfortable returning to their favorite stores and restaurants. Northeast Real Estate Business recently caught up with three real estate professionals to gain their insights into how the virus has impacted their local markets. Below are edited responses from Ronald Dickerman, president and founder of Madison International Realty, which provides equity capital to …
By Lynette Reichle, Reichle Klein Group On March 12, Ohio’s governor declared a state-wide order closing schools and gatherings of over 100 people. On March 15, he ordered all bars and restaurants to close dining rooms (but could maintain carryout and delivery) with further closings on almost a daily basis. Finally, the stay-at-home order came on the 22nd. As of the writing of this article, it is difficult to estimate the full effects of the COVID-19 pandemic and what the moves our government has taken to protect us will have on our real estate markets. Prior to the spread of the coronavirus, Toledo’s industrial real estate market had been running at unprecedented high levels in both leasing activity and new development for the past several years. While the beginning of this year was decidedly quiet compared with the fourth quarter of 2019, we had every reason to expect strong demand for industrial properties through the remainder of 2020. In fact, the Toledo market still suffers from an inventory problem; virtually every project that was built last year was a build-to-suit. Local and regional developers have yet to develop enough of an appetite to build speculatively. Further, no one in the …
By David Burback, Senior Vice President and Managing Director, Kidder Mathews A 1.4-million-square-foot distribution center in Rancho Cucamonga that was formerly owned by Big Lots, recently sold for $48 per square foot on the land value. The new owner plans to replace the existing building with a new state-of-the-art distribution center. By every metric, the Inland Empire continues to be the national leader in the industrial real estate sector. The area enjoys the advantage of being just 40 minutes from the two largest and most active ports in the country. Driven by the strategic expansion of supply chains and the rapid emergence of ecommerce, the Inland Empire remains the most robust industrial market in the country. Annual new construction is approaching 25 million square feet, and the absorption of space is in equal proportion. Rents have increased by 65 percent, sales prices have increased by 80 percent and land prices have more than doubled over the past five years, according to our research. There seems to be some moderation from these double-digit, year-over-year increases as we move into 2020. Yet, the market remains active on all fronts – user, developer and investor alike. The most active sector of the industrial …