Why a Commercial Tax Appeal?

For a commercial real estate owner, property taxes represent a substantial operational cost. Unlike residential property, commercial valuations are complex and highly susceptible to market fluctuations, lease terms, and capital expenditures. A successful appeal starts with recognizing the signs that your assessment may be vulnerable to challenge.

Some Red Flags

• Assessment Increased Despite Falling Rents: Your current assessment increased significantly despite stagnant or falling market rents.

• Assessor Used Outdated Market Data: The current vacancy rate in your sub-market (e.g., Hudson County Office Space) is higher than the rate used in your valuation.

• Incorrect Valuation Method Employed: The town assessor is relying solely on the Cost Approach when the Income Approach is a more accurate measure of market value for investment property.

• Current Cap Rates Not Reflected: Your property’s assessment is not reflective of current cap rates (capitalization rates) for its specific property class and risk profile.

• Recent Sales Ignored: A recent sale of a comparable property in your market suggests a lower per-square-foot value than your current assessment implies.

• High Vacancy Rates Not Reflected in Assessment: The municipal assessor is required to value a property based on its true market value as of the appraisal date. If your multi-tenanted office building or retail center is experiencing a significant, protracted vacancy that negatively affects its net operating income (NOI), but the assessment remains unchanged, the valuation is likely flawed.

• Recent Property Improvements or Repairs Ignored: Assessors sometimes incorrectly view any physical changes as value-adding improvements. In reality, essential repairs (like a new roof or HVAC replacement) may only maintain the current value. If you've made significant capital outlays that primarily address deferred maintenance rather than increasing income potential, the resulting assessment may be artificially inflated.