Industry
Office building property tax consulting
Office assessments are the slowest to reflect what has happened to office demand. Assessors carry forward face rents that were never collected net of concessions, vacancy assumptions from a prior cycle, and capitalization rates set before values repriced. They also ignore the leasing capital an owner must spend to fill space. We rebuild the income model on effective rent and current market evidence.
Face rent versus effective rent
The rent in the lease is not the rent the owner keeps. Office deals clear with substantial tenant improvement allowances, free rent periods, and moving or lease-assumption contributions, all funded by the landlord to reach the stated rate. Amortized over the term, effective rent is meaningfully lower than the face rent an assessor capitalizes.
Leasing commissions and downtime between tenants compound it. A building with heavy near-term rollover has committed capital ahead of it that a buyer subtracts from price. None of that is visible in a rent roll, which is why an income analysis that stops at contract rent overstates value in a concession-heavy market.
Vacancy the model has not caught up to
Office demand shifted structurally, and the effects are uneven. Newer buildings with amenities have held occupancy while commodity space has not, sublease space competes against direct space at lower rates, and tenants renewing frequently take less square footage than they had. An assessor carrying a jurisdiction-wide vacancy factor misses all of it.
The correct vacancy assumption is the one a buyer would underwrite for that building in that submarket — including shadow vacancy from space that is leased but unoccupied, and the realistic period required to lease space that is dark today. Where a building carries structural vacancy the market will not absorb, that is obsolescence rather than a temporary dip.
Capital obligations and functional obsolescence
Older office buildings carry capital the market prices explicitly: elevator modernization, HVAC replacement, façade and envelope repair, life safety and accessibility upgrades, and lobby and common area repositioning. A buyer deducts those costs. An assessment that does not is valuing a building that has already been improved.
Functional issues run alongside them. Deep floor plates with limited window line, low slab-to-slab heights, parking ratios below what a denser occupancy needs, and single-tenant layouts that require capital to demise all reduce what the space commands. Those are appraisal deductions, and they have to be quantified rather than described.
Services that apply here
Real Estate Assessment Review & Appeal
Annual review of every assessment you carry, and appeals pursued wherever the assessor’s value exceeds fair market value.
Read more →Business Personal Property Tax Consulting & Audit Defense
A review of returns already filed to recover overpayments, plus representation when an assessor or contract auditor comes calling.
Read more →Common questions
Our building is half empty but assessed as though it were full. How?
Mass appraisal models apply a stabilized vacancy assumption to a class of buildings rather than measuring each one. If the jurisdiction’s factor was set from historical data, it will not reflect a market that repriced, and it will not reflect your building specifically. Correcting it requires evidence: the rent roll, the leasing history, submarket direct and sublease availability, and the time and capital a buyer would underwrite to lease the vacant space. Absent that record, the model has no reason to change.
We signed a lease at a strong rate. Does that set our value?
It is one data point, and it needs context. A headline rate reached with a large improvement allowance and months of free rent is not the same as the same rate reached with neither. Effective rent, net of what the landlord contributed and amortized over the term, is what the deal actually produced. Assessors capitalize the face rate because that is what the rent roll shows. Presenting the full economics of recent deals — yours and comparable ones — is usually the most persuasive evidence in an office appeal.
What evidence best demonstrates that office values have fallen?
Transactions, first. Verified sales in the submarket, with the income in place at the time of sale, produce capitalization rates and prices per square foot that no survey argument dislodges. Second, leasing evidence: signed deals with full concession detail, showing where effective rents have landed. Third, the building’s own record — rollover, renewal spreads, and how long vacant space has actually taken to lease. Appraisal opinion supported by that record moves a board. Opinion without it does not.
Tell us about your office buildings portfolio.
Send the parcel numbers or the most recent assessment notices. We will tell you whether the value is defensible.