Some analysts are concerned that the future is looking even worse for Houston’s multifamily and commercial real estate markets due to the oil price slump. John Moran and David Chen at Macquarie say there has been much "handwringing" over the banking sectors' loan exposure to oil and gas companies but there could be a more serious ripple effect. "We have cautioned that second-order fallout, particularly around MF/CRE in 'oily' MSAs [metropolitan statistical areas], is potentially more troubling than energy credit per se," they said in a recent note.
In anticipation of an expected boom in new patients, some traditional hospital systems are shifting their expansion strategy toward mixed-use 'mini-districts,' bringing shopping, apartments, and hotels to hospital campuses. According to CoStar Group, nearly $100 billion in construction of new and expanded hospital medical office projects, both on and off the hospital campus, is under way across the U.S. In the current building boom, developers are as likely to be adding apartments, retail space and even hotels as more patient care facilities.
After several retailers succumbed to filing bankruptcy this year, many owners of malls and shopping centers were left scrambling to fill vacancies. Some landlords, however, found the silver lining. The vast majority of these type of properties are occupied and spare space is in short supply in many parts of the country, according to experts and landlord data. Because of this, optimistic landlords are willing to take a ‘calculated gamble.’ Rather than letting another retailer buy the leases and start paying rent immediately, some REITS will buy leases of struggling tenants and let the space sit open while they find new tenants they can charge higher rents.
Just as the property tax debate began heating up in the Pennsylvania Capitol as lawmakers attempt to finalize a budget, another hurdle was thrown into the mix. Senate Republicans plan to vote next week on a proposal to eliminate property taxes as a source of school revenue and replace them with hikes in the sales and personal income taxes. The bill’s key sponsor, Sen. David Argall, says he has bipartisan support and the only permanent solution to the property tax problem is to eliminate them completely. Even if his measure fails, its emergence could signal cracks in the tentative $30 billion budget deal Gov. Wolf and Republican legislative leaders touted last week.
After Monday’s shocking announcement that Marriott International would purchase Starwood Hotels & Resorts for $12.2-billion and create the world’s largest hotel company, industry analysts began to speculate not only on what the transformative deal means for the combined company’s massive portfolio, but what it means for the industry. The merged company will need to sort through and differentiate its portfolio of 30 brands, some of which analysts believe will need to be consolidated or de-emphasized.
Morristown and the Atlantic Health System, owners of the Morristown Medical Center, finally reached a settlement, ending the closely-watched property tax battle dating back to 2006. The likelihood of a settlement increased significantly in June when Tax Court Judge Vito Bianco denied Morristown Medical Center's challenge to overturn the Morristown tax assessor's denial of tax-exempt status for portions of its operations, and ruled that the hospital would be responsible for paying taxes. The judge found that the medical center had so intermingled its nonprofit and for-profit services and finances that it could no longer qualify for a tax exemption under state law.
The U.S. industrial market is seeing low vacancies and a significant amount of absorption, causing industrial rents to rise in most of the country’s major industrial hubs, according to Cushman & Wakefield’s third-quarter research report. “Healthy industrial fundamentals are still prevalent overall. For most markets, the industrial sector continues to perform extremely well,” said John Morris, logistics & industrial services lead, Americas, Cushman & Wakefield, in a written statement.
Property taxes are taking center stage in the Pennsylvania Capitol once again as Democratic Gov. Tom Wolf and Republican lawmakers try to balance the authority of school boards to increase taxes against a budget deal that would raise the state sales tax to finance reductions in school taxes. School boards, teachers’ unions and other organizations are speaking out again state officials’ attempt to further restrict school board autonomy, arguing it would worsen already large funding inequities between Pennsylvania’s richer and poorer school districts.
While hotel developers continue to add new supply thanks to strong demand and healthy fundamentals, many experts say that 2016 may be the final year of expansion for this cycle. Occupancy is expected to hit 65.6 percent by December, the highest annual level on record, according to a third quarter report from brokerage firm Marcus & Millichap. The average daily room rate has increased 5.2 percent to $120.99, and revenue per available room, or RevPAR, will reach almost $80 by the end of the year. Despite the strong hotel fundamentals, however, some owners and investors still have concerns of a downturn.
New Jersey Governor Chris Christie on Monday conditionally vetoed two controversial bills aimed at stabilizing Atlantic City’s chaotic finances. In an effort to end property appeal battles, which officials say “significantly strain city finances,” the first bill would have let casinos stop making property tax payments based on real estate values, and instead make fixed payments in lieu of taxes (PILOT) for the next 15 years. The second bill would have diverted gambling money to the city, which the city was counting on to help close a $101 million deficit this year. Christie suggested alterations to both pieces of legislation and sent them back to lawmakers for their approval.
The City of Austin filed a lawsuit challenging Texas' property appraisal system in August, seeking the reappraisal of thousands of commercial properties and vacant lands in Travis County. The city asked the court to block the “equal and uniform” provisions in Texas tax law that allow a property’s value to be lowered to the median appraisal of comparable properties, but recently dropped the part of its lawsuit asking the court to declare that mandatory sales price disclosure is necessary for appraisal districts to do their jobs properly. On Friday, however, state District Judge Tim Sulak dismissed the lawsuit, saying he wanted to get the case “teed up squarely for the court of appeals.”
After suffering plummeting property tax revenues for the past several years due to failing casinos, five bills aimed at stabilizing Atlantic City’s chaotic finances will become law Monday if Gov. Chris Christie doesn’t intervene. However, not everyone is on board with one especially controversial plan. The Casino Property Taxation Stabilization Act would let casinos stop making property-tax payments and instead cumulatively make $150 million in payments in lieu of taxes (PILOT) annually for two years, then $120 million for each of the next 13 years. Other bills would dismantle the Atlantic City Alliance and slash funding for the Casino Reinvestment Development Authority; money would be diverted from those agencies and instead go toward paying down Atlantic City’s debt and expenses.
Michigan lawmakers from both parties introduced bills this week aimed at stopping a common valuation method they say gives “unfair property tax breaks” to big box stores. According to the Detroit Free Press, local governments across the state say they are losing millions of dollars in taxes because big box stores are unfairly getting their assessments slashed by using the "dark store" theory in appeals. However, big box store owners uphold this is an appropriate valuation method, arguing that since they wouldn't sell their stores to other retailers, assessors should look at sales of stores that have gone out of business and are vacant, since that's the only way they would ever come on the market. The 'dark store' approach to determining value has been upheld by the Michigan Tax Tribunal and state courts.
It looks like Seattle voters have approved the "Move Seattle" transportation levy, as more than 56 percent of voters said ‘yes’ to the measure in a count Tuesday night, making it highly likely the measure will pass. Proposition 1 would spend a record-high $930 million over nine years on streets, bridges and other infrastructure improvements around the city. Property owners would shoulder the entire cost of the $930 million levy.
The City of Austin filed a lawsuit challenging Texas' property appraisal system in August, arguing it is unconstitutional because it has allowed properties to be assigned “arbitrary and unreasonable” values that are below their market values. The city’s lawsuit seeks the reappraisal of Travis County commercial properties and vacant lands, which a City Council-commissioned study said were undervalued by 27 percent and 76 percent in 2015, respectively. The lawsuit also said there is an "imbalance" when appraising different property types, as sales data for residential properties is easier to obtain than sales data for commercial properties. However, Austin is dropping the part of its lawsuit asking the court to declare that mandatory sales price disclosure is necessary for appraisal districts to do their jobs properly.
After conducting its first countywide property reassessment in 47 years, Indiana County officials will have more time to hear thousands of remaining formal appeals. Indiana County President Judge William Martin agreed to extend the deadline to hear reassessment appeals from Oct. 31 to Feb. 5. The county will then have until Feb. 15 to certify the results of the reassessment, a deadline that was pushed back from Nov. 15.
According to the Pittsburgh Tribune-Review, data on the county's 48,000 taxable parcels was collected from August 2013 through April of this year. More than 10,000 informal reviews were completed by the Aug. 10 deadline, in which parcel owners could address any errors in data collected about their properties. A roughly equal number of formal appeals, which allow owners to dispute new values assigned to their parcels, was scheduled in a process that began Aug. 10. Although five boards, the maximum allowed by law, were conducting hearings of the formal appeals every 20 minutes Monday - Friday, the extension was necessary in order to complete the remaining 4,300 appeals that had yet to be heard as of Oct. 21. County commissioners are considering engaging an outside firm to analyze the reassessment and look into the property values that were determined by Evaluator Services and Technology, Inc., the company that conducted the reassessment, in an effort to "ensure accuracy and fairness.” The commissioners felt many properties, particularly those in agricultural areas, had been assessed at values far beyond original estimates.