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Shopping centers throughout the nation continue to overpay
property taxes based on overstated valuations. That’s why a
round-table discussion moderated by POER Senior Consultant John
Heatley drew so much interest at last month’s West Florida Idea
Exchange sponsored by the International Council of Shopping
Centers (ICSC). The topic of Heatley’s presentation was, “How to
Effectively Contest Property Taxes.”
Retail Slumps but Taxes Increase
Median property
taxes for shopping centers went from $1.01 to $1.60 per square
foot during the up cycle of 2003-2007. And even during the
current downturn in the retail economy, median property taxes
still rose to $1.87 per square foot last year, according to the
Institute of Real Estate Management.
With the cards
stacked against retailers, it’s important that owners and
managers have a basic knowledge of valuation methods. For
example, the income approach is typically used to value shopping
centers and other commercial properties, while the market
approach is commonly used for residential assessments. The cost
approach can be used to check the reasonableness of both the
income and market approach.
In addition,
understanding appraisal principals and the methodology used by
local assessors to value retail properties can help identify and
resolve assessment errors.
Research is Key
It’s not enough to
just have an opinion that your shopping center is over assessed.
You must have the facts to prove it. This is where the expertise
of a property tax professional can be invaluable. They can
provide important information, including:
Most experts
believe shopping centers will continue to struggle this year, as
unemployment remains high and consumer spending is tight.
Managing and minimizing property taxes is an effective strategy
to help shopping centers improve their bottom line.
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