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Urgent Message-California Property Tax Relief
Tax Help
May, 2009. California is in a real estate crisis and indeed, an economic crisis the likes of which have never been seen in history. Major California commercial property tenants such as Mervyns, Hollywood Video, Levitz, Sharper Image, Performance Team Freight, Linens n Things and Circuit City have recently filed for Bankruptcy. It was only a few short months ago that one of the safest bets in Real Property Investment was a NNN tenant such as Circuit City. Today, owners of such leases are scrambling to sell their vacant big box space to nonexistent buyers. So goes conventional wisdom.
You are at this site because you realize that now more than ever before, commercial property owners and managers must streamline their expenses and prepare for a commercial property value decline that is just now becoming evident. Read the paragraph below from “CoStar Group, #1 Commercial Real Estate Information Company”:
Retail Space Availability Reaches All-Time High
The nation’s retail market posted negative quarterly net absorption for the first time, along with the highest vacancy and availability rates, since CoStar Group began tracking retail trends in 2000, according to the Bethesda, MD-based company’s first-quarter 2009 retail review and forecast.
CoStar’s research shows that the average days a retail space is listed on the market as “available for lease” has continued to rise — from 174 days in first-quarter 2006 to 370 days in first-quarter 2009…Unfortunately, CoStar is forecasting that the retail vacancy rate will continue to climb…Spivey showed that the average sale price per square foot has dropped from $235 to $125 since the recession started, while the average time a property spends on the market has increased from about 255 to 334 days.
CoStar forecasts that sometime in the next two to three years, the average retail cap rate could hit a level that is 400 basis points higher than where it was at the start of the recession. If that happens, the average cap rate would be around 11% (a high not seen since 1994), which would create better margins for buyers and should fuel transaction activity. Additionally, CoStar forecasts that the average sale price per square foot could go as low as 70% off pre-recession pricing and sales volume could end up as much as 90% off pre-recession activity, sometime in the next two to three years.
Okay, things are bad nationally but what about California? Here it is:
Spivey identified Los Angeles and Atlanta as having more excess retail inventory than any other markets…The markets with the largest first quarter increase in the average retail vacancy rate: Las Vegas (+154bps), South Bay / San Jose (+113bps), Baltimore (112bps), Inland Empire CA (+111bps), Southwest FL (+98bps), Phoenix (+94bps), Atlanta (+94bps), Sacramento (+89bps), Oklahoma City (+82bps), and Orange County CA (+82bps)…During first quarter, the markets that saw the largest net amount of retail space become vacant, as a percentage of total retail rentable building area (RBA), in order, were: South Bay / San Jose, Las Vegas, Inland Empire CA, Sacramento, Pittsburgh, Baltimore, San Diego, Phoenix, Oklahoma City, and Nashville.
That is the nature of the future of retail. But maybe you own apartments or industrial or office buildings. Then you know that as goes residential so goes retail so goes the rest of the commercial market. It’s one big game of follow the leader. While there has been relatively good news in the commercial sector until last year, the tide is currently changing.
Make no mistake; there is a problem, a big problem in the commercial real estate market similar to what just happened and is currently happening in the SFR market. Obviously you understand the need to be proactive in the face of this problem. The question we need to answer for you is why use California Property Tax Associates to assist you with this problem. What sets us apart from our competitors?
We Are Property Owners and Developers
At California Property Tax Associates we understand the problems of commercial property owners, managers and developers because our partners are commercial property owners, managers and developers. In addition to starting to work in the area of property tax appeals and reassessments in 1989, our associates have various past and current experience building residential development and commercial properties, as well as leasing experience as landlord and manager in the California property market. You will not be turning your property tax issues over to ‘form filers’ as many companies are, but to a group of people led by commercial property owners and managers experienced in owning and managing commercial properties. We understand this business from the inside.
And one more very important thing. Again to quote Andrew Florance, President and CEO of CoStar Group, “When the market is moving this rapidly you have to switch gears and look at it from a different angle.” He was talking about the fact that the Office Vacancy rate is not showing the real situation in the Office space sector. But his statement is much more far reaching.
Think Outside The Box
We hate to use this worn out expression but it is exactly what is called for in our current California Property Tax Assessment / Reassessment situation. The tried and true, follow the book procedures of the past need to be reinvented with each case. Can you get a loan like you could 2 years ago? Can you count on real estate appreciation like you could 3 years ago? Can you count on Chevrolet, Chrysler or Ford like you could a few months ago? The answer is a resounding NO! Neither can you approach a Property Tax Assessment Appeal case like you would have just a few years ago.
In the last year there have been many changes in the Assessment Appeals arena. Appraisal methods used for the past 14 years are being replaced with ’shoot from the hip’ thinking. To prepare for an Assessment Appeal in California Counties is in many ways like an unscripted debate, where common sense and proving ones case in real life are becoming more important than following ‘the rules’. That’s what Mr. Florance is saying above: “When the market is moving this rapidly you have to switch gears and look at it from a different angle.” And that’s what we do at California Property Tax Associates.
Experience, Knowledge and Common Sense
Our experience started in the last serious downturn in the market back in the early 1990’s. We worked within our knowledge of the Revenue and Taxation Code, the Assessor’s Handbooks and California Assessment Appeal procedures, and, based upon our extensive experience representing thousands of Clients and working Statewide, we developed strategies to maximize our Clients Property Tax Savings, Credits and Refunds.
The result? California Property Tax Associates is on the cutting edge ready to put our experience buying, building and managing real estate to work for you. We will represent you to reduce your property tax liability by using our experience and knowledge of the Property Tax Assessment Appeals system in California. And the best part to you? If you do not receive a property tax savings, credit or refund, you owe us nothing. No Savings; No Fee!
Contact us at (909) 867-5000 immediately with any questions or go to our Frequently Asked Questions page. Or if you’d rather, just fill out the form below and we will contact you directly. But don’t put this decision off; deadlines are rapidly approaching.
Comments or questions are welcome.
