Hold Onto Your Hats, it’s Assessment Season in Texas
Property tax assessments have arrived in Dallas-Fort Worth, adding to the list of challenges nationwide in commercial real estate.
Commercial valuations in Dallas County are up nearly 30 percent from last year, the Dallas Morning News reported, citing a study by Houston-based tax consultant O’Connor & Associates.
Hotels were hit with the biggest spike in values, up an average of 53 percent, followed by a 35 percent increase for apartments. Office buildings nationwide are undergoing a repricing due to scarce debt availability and other economic factors, but office valuations also jumped 19 percent in Dallas County.
“My desk is stacked,” said Candace Rubin, a Dallas-based investment adviser and broker who provides tax assessment and protest services for her clients. Most of her clients’ commercial properties have seen appraisal increases of just over 20 percent, she said.
The rise in property appraisals could compound other problems that have hampered the office market in recent months. Hiked interest rates, banking fallouts, lingering remote-work trends and fears of a possible recession are causing record high vacancies, slowed sales activity and lowered property values in many cities throughout the U.S.
Office transactions plummeted in DFW last quarter, with $227 million worth of sales. That’s down 80 percent year-over-year from $1.1 billion.
The new assessments are out of touch with the broader scope of the market, Dallas broker Mike Turner said.
“The tremendous increases in taxable values are a result of the robust markets we have experienced in the past,” Turner told the outlet. “The assessed values are to be as of January 1st of the tax year, so the trends at the latter part of 2022 should be taken into account when looking at 2023.”