Office property owners nationwide are grappling with an additional challenge amidst increased vacancies and diminished demand, which is resulting in reduced building values and subsequently higher property tax bills.
The growing discrepancy between the current value of office buildings, determined by their potential rental income, and the assessed value established by assessors, is leading to a surge in property tax appeals. This widening gap not only complicates matters for landlords seeking to refinance their loans but also signals potential fiscal strain for governments reliant on property tax revenues, industry analysts warn.
Shane Moncrief, a principal at Ryan, a global tax services provider, highlighted the issue, stating, “Assessments are surpassing market transactions significantly. Tax assessors tend to rely on historical data, but as the office market’s downturn persisted throughout last year, most assessors had already set their values based on outdated information from 2022.”
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