SUBURBAN OFFICE BUILDING
Over $380,000 in tax savings and refunds
The owner of a two-story, class C, office building in northwest suburban Cook County was frustrated by his property tax appeals and current counsel. He had engaged a few different law firms over the years that obtained him the traditional vacancy reductions but he didn’t feel like they were understood his situation. still felt that his taxes were too high – consuming a disproportionately high share of cashflow. He simply couldn’t afford to pay them.
The building exhibited substantial vacancy and functional obsolescence. The roof, glass curtain wall (windows) and HVAC system required replacement. The common areas and tenant spaces required substantial and costly renovations. Given low rents and high vacancy exhibited in the local office market, it was questionable whether it would be cost-effective to renovate this building and make all repairs required to modernize it. These facts suggested that the residual value of the building was quite low.
The owner contacted Elliott & Associates and asked us to provide meaningful assessment and tax reductions.
- Property Type: Suburban office building
- Savings: Over $380K in savings and refunds
- Location: Northwest Suburban Cook County, Illinois
- Description: 43,000 square foot office building
- Reduced underlying assessed market value of office building
- Caused assessing officials to apply a vacancy factor to reduced building valuation
- Taxes reduced by 40% over level prior to our engagement
- Obtained over $380,000 in tax savings and refunds
The Elliott team partnered with the owner and inspected the building in order to understand the full nature and extent of the renovations required to put the building in rentable condition so that it could effectively compete in the market. After reviewing the Assessor’s underlying valuation, our firm concluded that it was grossly excessive given the poor condition of the building, the required renovations and the low rents achievable following renovation. Our firm then obtained data on recent sales of comparable office buildings that confirmed our value conclusion.
Elliott filed a two-count assessment complaint. Our team argued that the Assessor’s underlying opinion of market value should be reduced and that a vacancy factor should then be applied to reflect the high vacancy experienced in the building.
Elliott & Associates obtained substantial assessment reductions from the Assessor and Board of Review. The assessing officials reduced the underlying market value substantially and applied vacancy factors that reduced assessments even further. Tax bills were reduced dramatically. We saved the client over $380,000 during the first two years of our engagement and the assessments and taxes were reduced by over 40% from the level in place prior to our engagement.
CONDOMINIUM OFFICE BUILDING
Over $239,000 in tax savings and refunds
A real estate developer constructed a 36,000 square foot office building as a rental property. He decided to convert the property into an office condominium building and sold about 1/3rd of the units at high prices on a per square foot basis. After having trouble selling the remaining units, the developer rented them out.
The Assessor chased the sales in the building. Sales chasings is the practice of valuing all units in a building based on a limited number of high price sales. As a result, property taxes rose to about $4.25 psf while competing (non-condominium) office buildings typically paid about $2.00 to $3.00 psf. This put the developer at a competitive disadvantage and he solicited Elliott & Associates for help.
- Property Type: Office Condominium Building
- Savings: Over $239K in savings and refunds
- Location: DuPage County, Illinois
- Description: 36,000 square foot office condominium building
- Reduced assessed market value of units well below sales prices of comparable units in the building after relentlessly appeal to the Board and to PTAB for several years
- Settled each of the PTAB cases by convincing the assessing officials that market values were close to the appraised values despite the limited high-priced sales within the building. We argued that the units should be valued based on the income they generated rather than higher/speculative prices they might sell for some day.
- Obtained over $239,000 in tax savings and refunds over 5 year period
Elliott & Associates researched the office condominium market in DuPage County. Our team observed a thin market with limited sales to owner-occupants at high prices per square foot and about an 8-year supply of product given low sales velocities. It was our view that sales of office condominium units to owner-occupants at high prices were speculative. Buyers were few and far between and sales volumes were low. In fact, only about 1/3rd of the units in the subject sold over a five-year period. Elliott further observed that office buildings held for rent traded at much lower prices per square foot than office condominium units sold to owner-occupants.
Our firm engaged an appraiser to value the subject and presented our research. The appraiser conducted his own independent analysis and essentially agreed with Elliott’s valuation. The appraiser valued the subject units at values similar to office buildings held for rent rather than office condominium units that sold in the then current market.
Elliott filed tax appeals to the DuPage County Board of Review several years in a row. The Board denied our appeals and we appealed to the Property Tax Appeal Board (PTAB).
Our firm eventually settled each of the PTAB cases by convincing the assessing officials that market values were close to the appraised values despite the limited high-priced sales within the building. We argued that the units should be valued based on the income they generated rather than higher/speculative prices they might sell for some day.
All told, Elliott saved the client over $239,000 in taxes over a five-year period in the form of reduced tax bills and tax refunds. Taxes are now stabilized and competitive at around $2.25 psf.
It took several years to resolve these cases, but our team’s persistence and the client’s patience paid off.