Hurricane Sandy, aka Frankenstorm, displaced many people from their homes and created an enormous demand for hotels. This unexpected source of income, if not properly considered in an income approach to value, will end up increasing the hotel’s real estate taxes next year.
Medical Office Buildings, along with Technology Facilities, have become the hottest commodity in the general office sector. According to GlobeSt.com, industry experts are agreeing that medical office is simply more stable than general office, and medical office investment represents a high percentage of overall office investment. Currently, medical office buildings are operationally outperforming general office in terms of occupancy, presenting a superior position of supply and demand to general office.
Hurricane Sandy is expected to have a devastating impact on life and property that are already struggling due to the Great Recession. However, according to the Philadelphia Business Journal, disasters can give the ailing construction sector a boost, and unleash smart reinvestment that actually improves stricken areas and the lives of those that survive intact. The level of preparedness for this storm is also more thorough, which should help in preventing some of the damage.
Office space demand across the country over the third quarter remained constant while absorption of available space continued to gain momentum. According to the CoStar Group's Third-Quarter 2012 Office Review & Outlook, the overall U.S. office vacancy rate edged down and net absorption rose to 15 million square feet during the quarter from 13 million square feet at mid-year 2012. Little new supply and construction helped balance the supply and demand.
The San Diego, California City Council will again allow commercial property owners to finance water and energy efficient improvements. According to the North County Times, the Property Assessed Clean Energy program allows commercial property owners to get privately backed loans to buy insulation, energy efficient appliances, solar panels, and water efficient fixtures and repay the loans on their property tax bills. Payments will stay with the property, not the business.
All five questions on the November 6th Florida ballot in five Central Florida cities would empower city commissions to offer tax breaks to build business in the area. According to the Orlando Sentinel, that authority is already available in more than two dozen other communities statewide. At the moment, cities in Central Florida feel they are at a competitive disadvantage in their own state due to companies locating in areas where these tax breaks are offered.
Growth in the job sector over the past few months should lead to similar results in commercial real estate going in to 2013. According to a forecast released last week by the Urban Land Institute (ULI), modest gains are expected in leasing, rents and pricing across all sectors. Still, many respondents to the survey by ULI believe that the growth has been much slower when compared to other recoveries, something that is not expected to change.
Midscale hotels across the United States are enjoying continued success due to strong absolute occupancies. According to Hotel News Now, year-to-date through August, midscale hotels had an occupancy percentage of 56.7% while upper-midscale properties saw 64.8% occupancy. Average Daily rate was also very good for the two segments at approximately $75 and $98 respectively. Additionally, supply growth is still down as new construction continues to slow, leading to higher occupancy among existing hotels.
Predictions from the Senate claim that the 2013 Legislature will repeal Idaho's business personal property tax. According to the Idaho Statesman, the repeal will require the state to replace revenue collected by local governments estimated at between $133 million and $143 million, and to phase in the repeal over six years. The basis behind the repeal is to attract more businesses to the state while rewarding those already there.
As a conclusion to a yearlong investigation into influence peddling and dramatic reduction of property taxes for political allies, Los Angeles County, California assessor John Noguez was arrested Wednesday. According to The Washington Post, Noguez was arrested along with his chief appraiser Mark McNeil and Arizona tax consultant Ramin Salari after being accused of conspiring to slash property values and save millions of dollars in property taxes for clients of Salari, a campaign contributor to Noguez.
Senior Housing claimed an 88.8% occupancy rate over the third quarter, up 0.2% from the second quarter and 0.8% from the previous year. According to REBusinessOnline.com, occupancy is now at a four-year high and with inventory growth remaining tempered, there should continue to be occupancy gains in the near term. Occupancy rates have increased consistently over the past 10 quarters and now sit 1.8% higher than its cyclical low of 87% in the first quarter of 2010.
Marion County, Indiana will delay mailing out new property-assessment notices until mid-December due to an error affecting up to 5,000 homeowners. The error was a failure to factor in recent home sales in certain areas. According to Indystar.com, those new values, resulting from the first wholesale reassessment of Marion County property in a decade, will play a key role in determining how much homeowners will pay toward next year's property tax bills.
In the election next month, Denver, Colorado hopes voters will pass a measure that would allow the city to keep $68 million a year normally returned through the Taxpayers' Bill of Rights. According to The Denver Post, if approved, this proposal would eliminate Denver's budget deficit, allow the city to recover more quickly from the recession and enable it to catch back up on essential services lost over the past four years.
Technology firms are beginning to persuade governments that they are REITs in order to avoid paying taxes. According to The Wall Street Journal, certain companies are saving up to $400 million a year in taxes by changing their tax status to that of a real estate investment company. The key is getting approval from the IRS to convert from a corporation into a REIT, a type of company that generally doesn't pay taxes.
A pair of Park Ridge, Illinois commercial property tax appeals could cost the city up to $40,000. According to The Chicago Tribune, the city Alderman approved unanimously a resolution to intervene on the appeals for property tax assessments on the AT&T Services and Park Ridge buildings that could cost the city and public libraries a combined $15,000 and $37,000 respectively.
A new annual report from the Tax Foundation has ranked New York the worst state for its business tax climate. According to the Poughkeepsie Journal, despite moderate corporate taxes, New York scores at the bottom this year by having the worst individual income tax, the sixth-worst unemployment insurance taxes and the sixth-worst property taxes. All the states in the top 10 suffer from complex, non-neutral taxes with comparatively high rates.
It is becoming common practice throughout Pennsylvania for taxing jurisdictions to delegate the tax assessment function to outside consultants. According to the National Real Estate Investor, incredibly, these consultants are compensated on a contingent fee basis for the additional tax revenue they can accumulate for the jurisdiction. Typically, this can average around 25 percent of the additional revenue received over a three-year period.
Even though Studley's Q3 office report showed a vacancy decline to 17.2% from 17.6% for Chicago's Central Business District, things may not be as good as the numbers are portraying. According to GlobeSt.com, there are pockets of demand in Chicago's CBD from the technology sector, and this is where the city is experiencing a tightening of space and some possible new construction, but outside of the tech world, activity remains sluggish.
Supporters of Proposition 116 believe it would spur hiring by cutting back on property taxes that businesses in Arizona pay on everything they need to operate. According to KTAR.com, under current Arizona law, equipment and machinery owned by businesses is subject to an annual property tax, with the first $68,079 of value exempt. If the proposition passes, the exemption for anything purchased during or after the 2013 tax year would rise to an amount equal to an estimated $2.4 million.
As changing demographics and buying habits continue to damage older, low-quality properties, the outlook does not look good for the future of America's outmoded malls. According to the CoStar Group, many trade areas are unable to support multiple malls, with dominant properties increasingly attracting shoppers and retailers at the expense of the outmoded centers, which are now so empty that they may be suitable only for demolition.
Kentucky's Blue Ribbon Tax Commission has spent several months going over the state's tax system and is close to finalizing a reformation to the state's tax code. According to WPFL News in Louisville, the commission has until the middle of October to present their proposals for tax reform to the Governor. Recent budgets have attempted to keep education funding intact while forcing drastic reductions on other programs across the state.
An uncertain short-term economic outlook has caused leasing activity to slow and vacancies to rise in the Washington, DC office market. According to the Washington Business Journal, although the area remains one of the healthiest office markets in the country, net leasing absorption was a negative 2.5 million square feet through the first nine months of 2012, compared to a positive 1.1 million square feet during all of 2011.
The property tax practices of Paradigm Tax Group and The Stallings Group have joined forces to form the Southeast region’s leading property tax consulting practice. “The combination of these two market leaders will allow for the seamless integration of The Stallings Group’s owners, employees, and customers into Paradigm’s national practice,” said Oscar Diaz, Regional Director and Principal of Paradigm Tax Group. “Combined, the expanded practice will offer enhanced service delivery and state-of-the-art online reporting capabilities while providing enhanced geographic property tax services all across the nation.”
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Comerica Bank's Texas Economic Activity Index showed a slight uptick up to 99.0 basis points for the overall health of the state's economy in July. According to the San Antonio Business Journal, the index takes into account nonfarm payrolls, exports, sales-tax revenues, hotel occupancy rates, continuing claims for unemployment insurance, building permits and the Baker Hughes rotary rig count.