Based on data recently released by Research firm Reis Inc that shows office markets with the biggest year-over-year changes in effective revenue per sq. ft. during the second quarter of 2016, the National Real Estate Investor provided a market snap shot of the top five best and worst performers. The tech sector continues to have a big influence on boosting performance in many office markets. And while it may not be entirely fair to single out some of the laggards on the list, there are some clear trends there as well. According to Reis, smaller tertiary markets continue to struggle to rekindle economic and job growth that will fuel demand for more office space.
More than 30 trade associations and businesses are banding together in an effort to increase their push to get Wisconsin's personal property tax law repealed. The Coalition to Repeal Wisconsin's Personal Property Tax, which includes major business interests in the state like AT&T, American Family Insurance, Wisconsin Manufacturers and Commerce, and the Wisconsin Restaurant Association, says the lack of structure in determining what property is and is not exempt from the tax is unfair and disproportionately affects small businesses.
Once again, New Jersey and Illinois ranked as the two worst states in the country when it comes to property taxes, according to a new survey from personal finance website WalletHub. In order to identify the states with the highest and lowest property taxes, WalletHub’s analysts compared the 50 states and the District of Columbia using U.S. Census Bureau data to determine real-estate property tax rates. While property taxes vary from county to county across the state, WalletHub divided the “median real-estate tax payment” by the “median home price” in each state to determine the property tax rate.
Office investment has taken off in the past two years, with the national sales volume in the sector rising to about $40 billion in the second quarter, according to the National Real Estate Investor. However, the high demand for office building in primary markets has pushed down available yields, causing investors to shift their attention to secondary markets in order to find higher returns. Office property sales in secondary markets totaled $8.5 billion in the second quarter, representing the strongest quarter since the recession and a 19.6 increase from a year prior, according to commercial real estate services firm JLL. In addition, the current urbanization movement and the growth in fundamentals, such as increased employment, is making secondary markets even more attractive to investors.
Companion proposals that would eliminate the business personal property tax are circulating in the Wisconsin Legislature. The personal property tax is a levy on business equipment (items not fixed to land, such as furniture, equipment, machinery and fixtures) that is assessed in addition to real property taxes paid by businesses, which the co-sponsors Rep. Bob Kulp (R-Stratford) and Sen. Tom Tiffany (R-Hazelhurst) say is an unfair, costly burden and inhibits additional investment from small businesses. They also believe it is a double taxation, as business already have to pay sales taxes for equipment purchases.
Gov. Scott Walker's proposal to shift property assessment duties from municipalities to counties is meeting a lot of resistance. The Wisconsin Towns Association recently voiced their opposition to the proposal, as have The Wisconsin Association of Assessing Officers and the Wisconsin Counties Association. Local governments are not the only ones at risk, however, as taxpayers could be impacted by the double whammy of greater costs and a lesser product. Counties would be allowed to charge municipalities for the services — up to 95% of what they are currently paying for assessments. But most municipalities favor contractors, utilizing private sector competition to obtain highest quality assessors at the most reasonable cost. The proposal requires full market value assessment every year, and a report The Milwaukee Journal Sentinel found that an in-house department might cost $25 per parcel to maintain, while a private company might sign a contract for $6 per parcel.
Wisconsin developers are wondering what's in store for the state's historic restoration tax credit program, as there was a large spike in demand for the credits over the past year. Developers are concerned the state may limit the program's future, while state officials remain quiet on the subject. The program, which offers a tax credit worth 20 percent of their cost of restoring a historic building, was put on month-long moratorium last year after developers claimed $35 million in tax credit awards, even though legislators were told to expect only a $4 million budget impact. The program's uncertainty will not only affect developers who want the credits for future projects, but also the investors the developers sell those credits to in order to raise money for the developments.
Milwaukee Mayor Tom Barrett is supporting a plan to give the controversial downtown Milwaukee streetcar an additional $49.3 million through two tax incremental financing districts the city will consider next month. According to the Milwaukee Business Journal, the proposal would raise more money for the proposed downtown streetcar using property tax increases generated by downtown properties along the line and new developments, including the Couture and 833 East office buildings. The new proposal increases the budget from $64.6 million to $113.9 million for 4.6 miles of track, adding money for the lakefront spur, and to potentially cover the cost of relocating underground utilities for the streetcar. If approved by the Common Council, construction could begin in late 2015 with the downtown loop and lakefront spur in full service by mid-2018.
Eight of nine legislators on the Legislative Council's Steering Committee on Personal Property Tax (PPT) have concluded that the time has come to repeal this tax on Wisconsin businesses. After hearing from dozens of witnesses in three official meetings over the summer, the legislators have found the personal property tax burden is now on a handful of businesses that have not been given an exemption.