Who Tops L.A.'s Property Tax Roll?

LOS ANGELES—Office properties general top the tax roll in US metros, but a recent survey from Yardi Commercial Café found that a mix of office properties and large retail properties make up the top 10 list of commercial property tax payers. City National Plaza came in first, paying $9.5 million in property taxes in 2016, but Westfield Century City and the Beverly Center were also on the list, as well as Dodger Stadium and the JW Marriott Los Angeles. To find out more about this mix of property tax payers and why it is important to track this information, we sat down with Ionut Ciutac, the author of the survey and a real estate market analyst at Yardi, for an exclusive interview.

GlobeSt.com: Why is it important to look at the leading property tax contributors in Los Angeles?

Ionut Ciutac: There are several ways we can look at this. From a community perspective, property taxes are essential in providing a steady stream of revenue to keep vital services for the community going, services which in turn help businesses, by creating the necessary conditions for professionals and companies to converge to certain areas (infrastructure, good schools, public transportation, etc.). From a business and investment point of view, we know that property taxes are closely linked to a building's value at a specific moment. So it's a good indicator of the future expenditures of the buyers who decide to invest in the asset.

GlobeSt.com: Why are L.A.'s highest paying property tax contributors focused mainly along the 110?

Ciutac: Since location brings a major contribution to a building's value, and ambitious developers have a vested interest in ensuring ease of access to their projects, it makes sense that many of these properties are huddled along the 110. That particular section of DTLA also sits near the junction of two metro lines, as well as Grand Park Station and Pershing Square Station. Transit-wise, the location has a lot to offer for those trying to avoid driving to work.

GlobeSt.com: How much do these top-ten contributors account for the total property tax roll in Los Angeles?

Ciutac: We can only provide a rough estimate for this one. According to Property Shark data, the total property tax in L.A. would be around $6.3 billion. If we exclude schools and government buildings that are tax exempt, we near $6.2 billion. All the buildings in our top 10 amount to $67 million. So we get something close to 1.1% of the total tax roll.

GlobeSt.com: Do these properties pay relatively high or low taxes compared to commercial assets in other major cities?

Ciutac: For comparison, the highest taxpaying building in L.A. pays $3 million less than Chicago's number 10, and also behind Dallas' number 2. There is less disparity between the amounts paid for the buildings in L.A.'s top 10 than there are in places like Miami for instance.

GlobeSt.com: There is a mix of office and retail properties. Is this mix common?

Ciutac: Chicago's top 10 is almost exclusively made up of office properties, whereas places like San Antonio display a more assorted mix of asset types – including office, retail, hotel, data center and industrial buildings as well. But this mix of office and retail does seem to be the rule rather than the exception in the top property taxpaying buildings' lists we've looked at so far. Our series looks at major financial centers across the U.S.; thereby we do not include secondary and tertiary markets.