Case Study: Shopping Center

Retail sector was hit hard by the recent economic crisis. And although the retail sales are slowly rising, it should not instigate that the industry recovered...

Solution

Our presentation to the local Board of Review documented a shift from net leases to gross leases. Even though minimum rents were increasing nominally, net rents after expenses were decreasing substantially.

We correlated an increase in market risk to the subject property to the opening of a new Super Wal-Mart on the opposite end of town.

We demonstrated the impact on rents, vacancies and cap rate attributable to the loss of a key anchor tenant.

Result

The client achieved a 30% reduction in the assessed valuation of its property with a corresponding 30% reduction in property taxes.

For more information on shopping center tax appeals, contact James Regan

Situation

An enclosed shopping center in downstate Illinois had experienced annual increases over a period of years due to the application of a township assessment multiplier.
Sales ratio studies are conducted annually by the Illinois Department of Revenue. These ratio studies produce township multipliers which are utilized to bring assessed values to one-third of market value as required by law.
An analysis of the subject property’s performance indicated that a reduction, rather than an increase, in the assessed value was warranted.

Challenge

Demonstrate that the subject property’s market value was less than its purchase price of five years ago, even though minimum rents at the center were increasing.