DALLAS-The second quarter of 2013 is quickly approaching which means one thing for commercial property owners—property tax appeals loom ahead. As we approach peak tax season, many owners may be asking themselves how aggressive appraisal districts will be when setting 2013 property values.

It is in an owner's best interest to determine an effective way to “predict” what values lay ahead. It's important to look at the market versus assessed values for 2012.  If the market value increased in 2012, but the assessed value lagged behind, the appraisal districts might play “catch up” when it comes to 2013 values. 

For the benefit of commercial property owners in Texas, we have analyzed three major markets – Dallas, Houston and Austin—comparing 2012 numbers to help give owners a better idea of what to expect in 2013.

Dallas: Expect commercial property value increases in 2013 to be more distributed throughout all market sectors.

Dallas County had a more targeted approach in where they increased values in 2012. Not surprisingly, hospitality and multi-family had the largest increases at 17% and 9% followed by office at 5%, industrial at 2% and retail was flat at 0% growth.  Also in 2012, revenues and occupancy rates increased and cap rates contracted in various sectors of the Dallas market. Effective rents for the office sector increased by 1% and the occupancy/absorption rate grew by 0.3%. These increases have caused cap rates to stabilize or reduce, leading to an increase in market value.

Compared to Houston and Austin markets, Dallas County had the lowest overall increase in assessed value for commercial real estate with a 4.2% increase. This number also includes new construction or rehab, but the majority of the difference is accounted for in increases of existing properties. However, the Dallas market should expect appraisers to be more aggressive; the growth in assessed value in Dallas County was almost half of Houston's Harris County, and many would argue that commercial real estate has been almost as good as or on par with growth rates in Houston.

Houston: Since Harris County was slightly less aggressive this year for multifamily values, the appraisal district may choose to compensate for that in 2013. Values increased by 7.8% for commercial property, but the level of increase was spread more evenly across the various asset types than Dallas or Austin. Like the Dallas market, hospitality had the largest increase at 14%. This was followed by office at 11%, multi-family at 8%, industrial at 6%, and retail at 5%.

Austin: Multifamily will continue to be a driving force behind the growth of property tax revenue. In 2012, Travis County assessed values had a 9% increase on commercial property. Again, hospitality led the way with a 15 percent increase in values followed by office at 13%, multifamily at 11%, retail at 4% and industrial at 3%.

With the above data, owners now have a better road map of what to expect in 2013. One common trend we saw in all three major Texas markets was the increase in the hospitality sector. Hospitality owners in each of these markets should expect to see growth in assessments that should be at the same rate as RevPAR growth.

Increased market value has occurred in various sectors in all three major markets and since 2013 assessed values are based off 2012 numbers, increases are to be expected in 2013 for all three big cities. While the above projections are generalized and each property is assessed differently, if a property saw an increase in 2012 net operating income, owners can more than likely anticipate a corresponding increase in property taxes.

Appraisal districts typically begin releasing property values around May 1. Although owners do not have full control over what the ultimate tax bill will be, they do have the power to manage this large operating expense by hiring experts and appealing values when appropriate.

Amish Gupta is COO of Real Estate Tax Consultants. The views expressed in this column are the author's own.