How Will Cities Deal With Falling Office Valuations?

Tax growth on commercial real estate has always been a budgetary business concern, but now the pressure has been mounting. For multifamily, it has become one of the growing operational expenses, with the top growth in a metro hitting 15.3% year over year, according to Trepp.

That’s multifamily, where even with economic headwinds the basics should remain strong, as a Morningstar analysis suggested. Now try the calculation with office. Thomas Brosy at the Tax Policy Center, a venture of the Urban Institute and Brookings Institution, looked at overall falling commercial property values — in July down 12% over the previous 12 months, according to Green Street, compared to a 50% increase in residential values over 2018 — and then considered what that means to cities and the potential implications.