Real Estate Reassessments: The Whole Truth
In most U.S. taxing jurisdictions, real estate reassessments take place on an annual basis. In other states (Maryland among them) they reassess on a multi-year schedule. Given the limited resources and time available to an assessing department it is difficult for assessors to visit every property prior to a reassessment.
Today, the proliferation of GIS mapping and street level photography make it easier for assessors to “lay eyes” digitally on a property. However, no assessor can spend the requisite time required to thoroughly inspect the nuances of each commercial property under their purview. As a result, important aspects of a property that may impact its value are sometimes missed during real estate assessments.
Our practice during an appeal is to engage assessors and request an onsite tour. This ensures the weight of certain issues that are deleterious to a property’s value are seen firsthand. This is especially critical when there are factors impacting the financial performance of the site that go beyond what a rent roll and financial statement may illustrate.
Here are three real-world examples where a site tour benefited our appeal efforts.
- “My retail tenants’ sales are down because access to my retail parking is impeded by accessibility issues related to the roads adjacent to my property. The traffic signals, turn lanes, and overall traffic flow are out of my control. And because retail sales are down, it makes it harder to lease space, so my rental rates continue to decline, and the length of time required to lease a vacant space is increasing.”
- “My older industrial property was not constructed to allow for the larger delivery and transport trucks that most businesses now use to move products in and out of warehouse space. My truck bay heights are too low and the size of the truck court leading to the delivery bays does not allow for the necessary turning radius required for larger semi-trucks to get in and out of my building easily. As a result, my property is not as competitive as other industrial properties in the market and I cannot command the average market rents you think I can.
- “We were notified a few months prior to your reassessment that our largest office tenant, who occupies all 5 floors of our building, is vacating at the end of next year. Given current market conditions and the types of prospective tenants in this market, we are going to have to break up the space on each floor and lease each floor to multiple tenants. Given the column spacing and the current tenant’s build out, it is going to cost more than $100 per square foot and 8-12 months to build out each floor. As a result, this negatively impacts the value of our property in ANY investor’s eyes.”
Seeing is believing. And sometimes certain value detractors are missed without an onsite tour with your local assessor.BACK TO ARTICLES