Three things to consider about your property tax assessment.
There are three important factors to consider about your current industrial property tax assessment when determining if an appeal is the right next step.
Age: Has it been five or more years since the last property tax assessment?
Industrial property owners often see a static market and assume their years-old assessment is fine, but a lot can change in five years.
Property values decline over time because of age and condition, which an old assessment doesn’t reflect. Likewise, if an addition was put on, it doesn’t necessarily add value to a building because of the high rate of property depreciation. A property reassessment can determine the true value of a property in anticipation of sale or remodeling.
Maintenance: Have excess maintenance costs been incurred because of deficiencies or problems with the property?
Take this example: A 500,000-square-foot, 20-year-old building has a flat roof that needs to be replaced at a cost of $6 per square foot, bringing the total to $3 million.
An assessor might not know about the roof, and a buyer would challenge the asking price for the property with this or a similar maintenance issue. These and other excess maintenance costs incurred by the owner because of deficiencies or problems with an industrial property call for a reassessment.
Sales prices: Are you aware that sales prices have declined for major industrial buildings?
Sales prices of major industrial buildings have taken a hit since the start of the recession.
A recent example in the Twin Cities area was the sale of a 500,000-square-foot industrial space in Brooklyn Park. The company moved its production offshore and sold the building for $22 per square foot; pre-recession, the going rate of similar buildings was more than $40 per square foot. Fewer companies are able to sell their properties at the former value because of the number of properties on the market. A reassessment can lead to a more accurate reflection of property value in light of today’s economy.