E-Commerce Demand Drives Major Valuation Increases for Houston Warehouse Properties

Written on April 17, 2018 at 10:56 AM

By Amanda Moore, Managing Consultant, Houston

Harris County, Texas has released the vast majority of their 2018 notice values for commercial real estate. They’ve come out especially strong in the industrial sector with warehouse properties seeing a 12% increase over the 2017 certified values and a 6% increase over the 2017 noticed values.

Harris County says Houston is becoming an “industrial hub” due to the rapid growth in e-commerce driving high demand. The county points to flat vacancy rates at 5% and increasing asking rental rates to support their position on the warehouse market. Of the 6.4 million SF of warehouse product under construction, 29.3% is pre-leased. The price at which warehouse product is trading is also increasing - $77 PSF vs. $67 PSF in the prior year. Port of Houston is emerging as a key national distribution region, further fueling the fire for increasing warehouse values with decreasing cap rates YOY. 

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Categories: Distribution Centers, Industrial, Real Property, Paradigm Info, Texas, Warehouse

New Jersey Taxing Jurisdictions Engaging in "Reverse Assessment Appeals"

Written on April 03, 2018 at 01:02 PM

In many areas across the country, such as Pennsylvania and Ohio, it has become a common, albeit controversial, practice for taxing jurisdictions to file "reverse tax appeals" against commercial property owners. These jurisdictions track property sales, specific asset types (e.g. apartments), and other information in order to gauge potential opportunities to seek higher commercial property valuations and boost their real estate tax revenues.

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Categories: New Jersey, Real Property, Paradigm Info

Toys R Us Closures: An Update on the Demise of Major Retail Chains and its Impact on Tax Assessment Rolls Nationwide

Written on March 20, 2018 at 12:15 PM

By Jerry Heaton, Senior Managing Consultant, Dallas

March 2018 Update: The battle between Amazon and bricks-and-mortar retail wages on with Toys R Us abruptly announcing plans to close or sell more than 800 stores across the U.S.  The impact of Amazon was the basis for the Toys R Us bankruptcy and will leave many big box vacancies coast to coast, putting pressure on market rents, occupancy costs, and diminishing real estate values. My original article below discusses the impact of these retail chain closures and the long-term ramifications upon tax assessors’ property tax rolls. Shopping center landlords will struggle to fill the massive amounts of big box vacancies as shopping trends continue to shift online and retailers move to smaller format spaces. 

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Categories: Big Box, Strip Centers, Retail, Paradigm Info

How to Use ‘Equal and Uniform’ to Reduce Multi-Family Property Values in Texas

Written on March 14, 2018 at 04:02 PM

By James Sutton, Regional Director - Central South, Dallas
& Bill O’Quinn, Senior Managing Consultant, Dallas

To say the multi-family market in the Dallas-Fort Worth metropolitan area is performing well would be an understatement. Deliveries were up 14 percent in 2017, vacancies were down 4 percent, rental rates were up nearly 7 percent, and cap rates were down almost 20 basis points. From a property tax standpoint, factoring all of these variables into an income approach to valuation would support higher assessed values at the appraisal district level. While this may be the case, there is another valuation method that needs to be considered before giving up on your property tax appeal.

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Categories: Real Property, Apartments, Paradigm Info, Multi Family, Texas

Managing a Decade of Increasing Property Taxes in the Dallas-Fort Worth Industrial Market

Written on March 06, 2018 at 12:49 PM

By Carlos Villatoro, Senior Managing Consultant, Dallas

A prominent national industrial REIT client recently asked for a historical summary of property taxes for a distribution warehouse they were considering purchasing. We were alarmed to see the property had experienced seven consecutive years of significant increases and had already budgeted for another increase in the upcoming year. Unfortunately, this trend is not specific to that one property alone. By 2020, I will not be surprised if we will have seen a decade of continual property tax increases for nearly all industrial properties across the Dallas-Fort Worth (DFW) area. In order to minimize and manage these increases as much as possible, it’s crucial to understand why and how they are happening in the first place.

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Categories: Distribution Centers, Industrial, Real Property, Paradigm Info, Texas, Warehouse

Mixed-Use Properties Create Valuation Challenges for Texas Appraisal Districts

Written on February 21, 2018 at 02:48 PM

By Alex Pace, Managing Consultant, Dallas

Mixed-use properties continue to gain popularity in response to the growing desire for the convenience and walkability of urban living. Savvy real estate developers and owners understand that providing a vibrant mix of office and living space, restaurants and retail under one roof allows them to meet – and capitalize on – a variety of consumer needs. While implementing a “live-work-play” concept certainly adds value to a project, the relatively new and complex nature of a mixed-use property is creating valuation challenges for Appraisal Districts that could be costing you.

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Categories: Office, Real Property, Hospitality, Retail, Paradigm Info, Multi Family

Stay Committed: How to get the most out of your Texas property tax appeal

Written on February 13, 2018 at 12:33 PM

By Carlos Villatoro, Senior Managing Consultant, Dallas

It is no secret that significant commercial real estate investments continue to pour into the great state of Texas. However, if an owner isn’t lucky enough to receive major tax breaks from local jurisdictions as an incentive to invest here, they will have to accept some of the highest effective property tax rates in the country. The tradeoff is that Texans enjoy a relatively low sales tax rate and zero state income tax rate. Fortunately, the Texas Property Tax Code offers multiple appeal recourse avenues, which allow owners and tenants alike to review the property tax liability from a fair and competitive standpoint.

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Categories: Personal Property, Office, Industrial, Real Property, Hospitality, Retail, Paradigm Info, Multi Family, Texas

Navigating Property Taxes for Student Housing

Written on December 18, 2017 at 01:50 PM

Property tax professionals lend their expertise on tackling student housing property taxes.

By Amy Bigley Works | Student Housing Business

Managing property taxes and ensuring the best valuation can be challenging for any commercial real estate property type, but for student housing owners and operators the process can be even more daunting. Student Housing Business spoke with student housing property tax experts to gain insight and recommendations for coming out ahead in the property tax and property valuation. Larry Backus, North Texas market leader, was one of the experts to share his knowledge and expertise on property tax for the student housing industry.

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Categories: Real Property, Paradigm Info, Multi Family, Student Housing

Four Tips for Keeping Property Taxes from Impacting Your Hotel's Bottom Line

Written on December 14, 2017 at 10:39 AM

by Jessica Vachiratevanurak, Managing Consultant, Miami | Today's Hotelier

For hoteliers, property tax expense is often a substantial fixed expense. As a result, understanding how property taxes are calculated and what owners and operators can do to mitigate them is crucial. Below are four tips for keeping property taxes from unduly impacting your hotel’s bottom line.

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Categories: Real Property, Hospitality, Paradigm Info, Hotels

CRE Has Been In Ninth Inning For Two Years

Written on November 29, 2017 at 10:42 AM

Many are predicting a leveling out of the commercial real estate market in the coming year. Texas Market Leader James Sutton discussed 2018 commercial real estate trends and the implications of the leveling-out process in the Houston market in this EXCLUSIVE with GlobeSt.com.

GlobeSt.com: What are the commercial real estate trends you are seeing in Houston for 2018?

Sutton: Decrease in overall vacancy for industrial properties, as well as a decrease in overall vacancy, increase in rent growth and zero concessions for multifamily properties. In addition, there will be a reduction in office sublease space as a result of the storm (Harvey). This is a short-term correction as a result of the office sector’s issues stemming from the energy market decline.

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Categories: Office, Industrial, Real Property, Retail, Paradigm Info, Multi Family, Texas

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