The pandemic hit the commercial real estate market hard. Property tax bills now reveal just how difficult it is.
New York City expects property tax revenue to fall $ 1.6 billion, or 5 percent, in the next fiscal year, Bloomberg News reported. That’s the biggest drop in the city’s biggest source of income since the early 1990s.
The market value of office buildings – not their real-world value, but the metric used by the city’s Department of Finance – fell 16 percent citywide, according to the agency. The value of some major skyscrapers fell by more than $ 100 million, the publication reported.
Some properties got appraisal cuts even though they did relatively well during the pandemic: Two Vornado Realty Trust properties received reductions of 14 percent and 23 percent despite major tenant rents increasing in value, it reported. the publication.
The city generally relies on information from building owners for evaluations. But this year, the Finance Department considered other metrics because the data presented was pre-pandemic. A spokesperson for the agency told Bloomberg News that it wanted to better reflect actual market conditions.
Overall, landlords saw big cuts even though many continued to collect rent from tenants. While lower appraisals will save homeowners money, remote work is likely to ultimately affect building revenues.
The value of hotels and commercial properties fell by more than 20 percent, the publication reported. The accommodation industry is struggling. St. Regis and Four Seasons saw their taxable value reduced by 36 percent, the publication reported. New York Midtown had a 13 percent cut on the final tax list.
Lower values can affect city revenues for a time, as property taxes are generally based on the average value of the previous five years, Bloomberg News reported. Property tax revenue largely feeds the city’s social programs and services.
“The question for the city is really long-term,” Ana Champeny, director of city studies at the Citizen Budget Commission, told the publication. “Until we know what happens to remote work and office use and tourism, it will not be entirely clear how the commercial real estate market will recover.”
[Bloomberg News] – Cordilia James