Florida voters approved a constitutional amendment by more than 70 percent in Tuesday’s primary election, which will exempt solar and other renewable energy devices on business and industrial property from property taxes for 20 years. The same tax break already exists for residential property owners. Amendment 4 also exempts renewable energy devices from Florida’s tangible personal property tax. The Legislature, which put Amendment 4 on the ballot, must pass a bill in the next session in 2017 carrying out the will of the voters.
Buoyed by a steadily improving labor market and strong demand for multifamily housing, commercial real estate activity should remain on an upward trajectory, with a growing share of it is expected to be in smaller markets, according to the National Association of Realtors quarterly commercial real estate forecast. Overall office vacancy rates are expected to fall 1.5% to 10.4% in the next year, as are industrial vacancies (0.7% decline to 8.7%), and retail vacancies (1.0% decline to 10.5%). Only vacancies in the multifamily sector are expected to edge higher over the next year, from 5.9% to 6.1% percent, as new apartment construction comes onto the market.
A proposed Kansas City incentive reform ordinance that would place a 75 percent cap on property tax diversions, abatements or exemptions for development projects was roundly supported last week at hearing during the council's Planning, Zoning & Economic Development Committee. The ordinance was written by City Councilman Quinton Lucas in response to the increasing use of citizen petitions to fight incentives on a project-by-project basis. Some say the threat of such petitions has scared development projects away.
While details still need to be sorted out and no action on the ordinance has taken place, the measure will be taken up by the PZED Committee again this week after members have had "time to digest" input provided by 21 citizens, school superintendents, and other civic and business leaders who testified Wednesday.
As the early results of the student housing fall leasing season roll in, the sector will continue to attract new investors and the bidding for properties will likely intensify. Occupancy rates are on track to meet or even exceed the high levels set last year as the market easily absorbs the new student housing beds that get delivered. Properties are pushing rents and still maintaining leasing velocity, which will spark a higher volume of transactions this fall despite investors already acquiring a tremendous volume of student housing properties this year. But the sector's strong fundamentals and success isn't all that surprising, as the share prices of the two student-housing REITs are soaring.
Gov. Cuomo announced Wednesday a plan to resurrect New York City’s 421a property tax abatement program, but real estate development experts are a bit weary of the proposal. It’s been eight months since 421a expired due to a construction wage agreement not being reached between the Real Estate Board of New York and the Building Construction Trades Council of Greater New York.
Cuomo’s proposal echoed past plans for the tax break, but put forward a new wage subsidy for large projects in Brooklyn and Queens. While the plan leaves several major questions unanswered — including how the state will pay for it – it appears to be an important first step toward unions and developers reaching a resolution.
While the Midwest multifamily market may never experience the headline-grabbing stats that core, coastal cities do, its reliability continues to make the region an immensely attractive environment for private equity and similar investors. Secondary and tertiary metro areas such as Cleveland, Kansas City and Indianapolis are strong, steady, and a solid bet for investment. The higher cap rates and steady rent growth found in the Midwest offer higher returns in asset values than the nation's primary markets, especially as the sector approaches affordability ceilings in places like New York and San Francisco.
The current deflationary environment in food retail — particularly in the midst of an otherwise healthy economy — is a nearly unprecedented event in recent industry history and indicates an operating climate that has become "just awful," an analyst told Supermarket News (SN). Current price deflation goes beyond the farm issues affecting the price of proteins like eggs and meat, Scott Mushkin of Wolfe Research told SN in an interview. It also reflects overstored markets, changing demographics and the continued growth of nontraditional competitors such as Amazon and Blue Apron. "There are too many assets chasing too few sales due in large part to over-building and unfavorable demographics," Mushkin said. "This is leading to slack revenue growth and falling prices." The consumer price index for food at home has been negative on a year-over-year basis since December, Mushkin said, noting that it was only the third time in the last 15 years food had turned deflationary. "Those other periods of deflation [1992 and 2008-09] always coincided with the bottom of the economic cycle, when things were terrible, people were chasing after sales because demand was not there and unemployment was really high," he said. "That's the not the case this time. It's weird."
Despite previously approving transfer tax increases in 2008 and 2010, San Francisco voters will be asked again in November to raise transfer taxes on properties that sell for more than $5 million. The increase would include homes, but would mainly affect sellers of commercial property and indirectly affect buyers and tenants. The ballot measure would raise the transfer tax rate to 2.25 percent from 2 percent on properties worth $5 million to $10 million, to 2.75 from 2.5 percent on properties worth $10 million to $25 million; and to 3 percent from 2.5 percent on properties worth $25 million and up. San Francisco already collects more transfer tax revenue than any other city in California, but because revenue from the proposed increase would go into the city’s general fund, the ballot measure needs a simple majority to pass.
The Philadelphia School District announced Tuesday that it will begin a three-year pilot program to identify undervalued properties throughout the city in an effort to increase tax dollars. The controversial “reverse tax assessment” method has become a common practice throughout Pennsylvania, where school districts file real estate assessment appeals seeking to increase property assessments and overall tax revenue. The Philadelphia School District will seek proposals from law firms, real estate appraisers and other professionals to help identify properties that are assessed at least $1 million under their actual value and appeal those assessments. While the district says it isn’t only targeting commercial properties, it’s likely that most of the parcels affected would fit that description.
As online retailers shift their focus to two-day and same-day package delivery, warehouse builders are beginning to redraw the map of logistics hubs on the East Coast. Historically, the area around the central Pennsylvania towns of Harrisburg and York has hosted large clusters of warehouse space because of light zoning restrictions, access to several large city population centers and ample cheap land to build on. But in the last five years warehouse development in the Lehigh Valley, which is to the north and closer to New York City, has surged, according to brokerage CBRE Inc. Over the weekend, FedEx Ground, broke ground for its largest facility in the country, an 800,000-square-foot automated distribution center in Allen Township, Pa., adding a large chunk of space to the cluster of logistics real estate in the state’s Lehigh Valley area.
By Paul Shoup, Senior Managing Consultant, Washington D.C.
In the state of Maryland, properties are reassessed every three years (triennial) and assessments are phased in over the three-year cycle. Real estate assessment appeals can be filed subsequent to the issuance of a new notice of value at the beginning of a new cycle and, if successful, can impact all three years. In addition, an appeal can be filed prior to January 1 in the 2nd and/or 3rd year of the cycle.
The process includes a first level administrative appeal with the State Department of Assessments & Taxaztion (SDAT); followed by, if warranted, a second level appeal to Property Tax Assessment Appeals Board (PTAAB); and, if further warranted, a third level appeal to Tax Court.
In many areas across the country, some taxing jurisdictions have begun the process of filing what has become known as "reverse appeals," whereby the jurisdiction seeks an increase of a property assessment. Working internally and with consultants, these jurisdictions will track property sales, property types (e.g. apartments), and other information to gauge potential opportunities to seek higher valuations and real estate tax revenues. It has become common practice in Pennsylvania for school districts to commence appeals against property owners seeking to increase assessments and tax revenue.
JLL recently released their mid-year update to the 2016 Skyline Report, which provides insights on office supply, demand, rents and leverage for the top-tier office market within CBDs and urban cores. According to JLL, below are five key trends that shaped the Skyline update:
While college students might not seem like the ideal tenant for landlords, the share prices of the two student-housing REITs are soaring. Shares in Education Realty Trust, a Memphis-based landlord whose earnings report met Wall Street expectations, are up 54 percent in the past year. American Campus Communities, the only other publicly traded student housing landlord, is up 44 percent. By comparison, a Bloomberg index of North American apartment landlords is up 12 percent over the same period.
Florida voters will be asked on the primary-election ballot on Aug. 30 to extend the residential solar energy tax break to commercial and industrial property owners, and thus significantly expand renewable-energy production in the state. Crafted by the Legislature, the broadly supported Amendment 4 proposal would exempt for 20 years the assessed value of solar and renewable-energy devices installed on businesses and industrial properties.
Despite enacting the largest property tax increase in modern Chicago history this year, escalating pension costs are expected to trigger another significant tax increase in 2017. According to the city's Annual Financial Analysis released Friday, a shortfall of $137.6 million is expected in next year's estimated $3.7 billion corporate budget. Although the shortfall is expected to be the smallest in a decade, the estimate doesn't account for billions of dollars owed to the city's largest pension fund. City financial officials conceded Friday that a new money stream of hundreds of millions of dollars each year will be needed for stepped-up contributions to the retirement fund for municipal workers.