By James P. Regan

As published by GlobeSt.com, February 2003

There has been a confluence of contradictory office building data which could easily confuse the City’s 2003 Triennial Real Estate Reassessment. Loop office buildings have been experiencing rising vacancy rates and declining rental rates. Also, a number of office buildings have been sold for prices that are as much as fifty percent higher than the previous round of sales.

The sales might appear to signal significant increase in the market value of downtown office buildings and, thus, increased assessments. The key is whether recent sales represent market value, since real estate assessments must be based on market value.

The identity of the buyers and their objectives and the abundance of cheap funding are strong evidence that the sales are indicative, not of market value, but investment value. For that reason, market indicators such as vacancy and declining rates should be the strongest influence on the 2003 assessments.

 

James P. Regan is the managing partner of the Chicago law firm of Fisk Kart Katz and Regan, Ltd., the Illinois member of American Property Tax Counsel (APTC), the national affiliation of property tax attorneys.