Philadelphia commercial property owners should expect major increases when they receive their property assessments mid-April. The value of the taxable portion of Philadelphia’s 14,000 commercial buildings went up by nearly 40 percent — from $14.4 billion to $19.7 billion — with the reassessments, an increase that will contribute to the expected $118 million in new tax revenue to be split between the city and school district. This is the first full reassessment of commercial properties since the controversial Actual Value Initiative (AVI) in 2014, which uses actual market values as the assessment standard.
Student housing communities have been engaged in an amenities war for quite some time now; but as close proximity to campus becomes the strongest performance driver, developers need to be much choosier when it comes to their properties. Picking out amenities was a much easier job just a few years ago when many student housing properties were built a mile or more away from campus, where a development could sprawl over 20 or 30 acres. While student housing communities are still competing to provide the flashiest amenities, it is imperative developers are ultra-selective as they build on tiny urban sites where space is at a premium.
The run-up in U.S. real estate prices could potentially amplify any future economic downturn, a Federal Reserve official said on Tuesday, urging regulators globally to consider tools beyond interest rates that could help cool the sector. A sharp downturn in U.S. residential and commercial property prices in 2007 and 2008 rocked banks that were highly leveraged in the sector, sparking the global financial crisis and deep recession. With the economic recovery now well under way, bank holdings of commercial and apartment mortgages rose 9 percent and 12 percent, respectively, in the past year.
Categories: Real Property
The war between local governments and Texas lawmakers rages on after the Senate approved a controversial reform plan aimed at curbing rising property tax rates and ballooning tax bills on Tuesday. By an 18-12 vote, mostly along party lines, the Republican-controlled Senate approved Senate Bill 2, which would mandate an automatic election to allow taxpayers to decide any rate hike of more than 5 percent. Under existing state law, 8 percent is the maximum allowed before taxpayers can petition for a rollback election. Supporters say it’s necessary to slow steadily-rising property taxes, while opponents argue it will impair cities, counties and school districts' ability to pay for key services.
Rents for Class A office space in Miami are high, at $50 or more per square foot, and will continue rising as the market tightens, a panel of real estate experts said at a Bisnow conference Thursday. Despite the city’s increasing traffic problems, the panelists said they expect sustainable demand growth for Miami commercial properties in the future, since the city is an appealing location and a gateway to Latin America. “The market is tightening up,” said Angelo Bianco, managing partner at Crocker Partners told attendees. “Developers are getting better rates and lower concessions.” At the same time, he added, “Capital markets seem to be taking a break and people are more cautious. Deals are taking longer to close.”
By Stephen Cox
Consultant, Atlanta, GA
Throughout the year, the Institute for Professionals in Taxation (IPT) hosts luncheon groups across the country, providing an opportunity for local members of the Institute to gather and discuss taxation topics of mutual interest or concern. As an IPT member, I recently attended an Atlanta luncheon in which the Chief Appraisers from Fulton, Cobb, and Gwinnett counties spoke on various property tax related matters in Georgia.
Detailed below are my thoughts on some of the more notable pieces of information discussed at the luncheon and how it relates to Georgia commercial property taxpayers:
Property tax reform has been a major priority this legislative session for Texas, but a political showdown is taking place between state and local governments over new legislation meant to curb rising property tax rates and ballooning tax bills. Senate Bill 2 would lower the property tax rollback rate for governmental entities from 8 percent to 4 percent, meaning an election would be triggered any time an entity’s property tax revenue increased by 4 percent over the previous year. Lawmakers argue SB 2 would make taxing entities more transparent and accountable to the public, while taxing authorities view the bill as a dangerous precedent and warn that local services would suffer from the restricted funding.
Change is coming even as the commercial real estate market flourishes in the current post-recession boom, Christopher Lee, president and CEO of Los Angeles-based commercial real estate consultancy CEL & Associates, said at the NAIOP Minnesota event this week. Lee predicts a 2018 end to the current commercial real estate cycle and major industry shifts based in part on “generational” factors, including millennials eschewing homeownership, younger workers spending less time in the office, and manufacturing productivity increases fueled by automation and robots. “This is a great time to be in real estate, but you’ve got to be on your game,” Lee said. “We’re in the seventh inning. Our cycle is about to end.”
Continued growth in e-commerce has driven industrial vacancy to an all-time low, declining by 70 basis points from a year ago to an aggregate nationwide vacancy of 5.6 percent in the fourth quarter of 2016, according to the year-end industrial market report from real estate services firm JLL. JLL researcher Aaron Ahlburn says that the former record low vacancy was in 2000, when the rate dipped to a 7.0-8.0 percent range as a result of market expansion coming out of the dot.com bubble. Increasing competition for industrial space has caused rental rates to hit record highs, breaking the $5 per sq. ft. triple-net barrier for the first time, Ahlburn notes, and has set off a building boom.