Gap Widens between NYC Office Property Assessments and Actual Values
Early spring not only brings the deadline for income tax filing, but for many New York City property owners, the annual assessment appeals deadline as well. The reality of the ongoing challenges facing the office real estate market since the pandemic that have resulted in “plummeting market values and growing signs of distress on the ground,” doesn’t seem to be reflected in the city’s tentative assessment values released mid-January 2024. The widening disparity between the Tax Commission and what market participants claim a property is worth is in part due to a “lack of data points and not enough sales to review,” with trophy and premium space serving as the primary driver for the 3.5% year-over-year overall increase of office building assessments. Although property owners can file an appeal, high-value properties assessed at more than $67 million are given priority by the commission with a response in a few weeks, while others have to wait; and their review just scratches the surface. If a full review is wanted, the appeal needs to be directed to the city’s Law Department, but a response can take several years. It is anticipated that until the market can show reductions are warranted, the Tax Commission is unlikely to issue huge reductions to office buildings. In the meantime, property owners have to pay taxes based on the city’s assessment.