Survey Shows Dallas CBD Hardest Hit in 2002 Assessments

DALLAS-A 6.2% average increase in 2002 proposed assessments has the Dallas Central Appraisal District busy with hearings. A survey of 113 buildings in 10 Dallas County submarkets shows the CBD got hit the hardest with a 10.2% increase in assessed valuations, according to Stephen T. Crosson, chairman and CEO of Crosson Dannis Inc. in Dallas. The smallest hike, 1.48%, was leveled in Preston Center.

Crosson says the brouhaha is winding down as the appraisal district works with building owners to right size increases in light of the depressed office market–based on preliminary feedback that he’s getting from the appeals circuit. The DCAD office did not return telephone calls by press time to ascertain the number of hearings that have been held or are yet to come as a result of the flood of appeals reportedly lodged by commercial building owners.

The 10-submarket survey showed assessments up 6.2% on the average despite a 4.2% drop in occupancy and 3.2% dip in quoted lease rates. Crosson tells GlobeSt.com that the across-the-board jumps are tantamount to “a de facto tax increase.” Texas, as elsewhere, will use assessments to skirt raising taxes so there is more revenue for the coffers but the onus isn’t resting on politicians’ shoulders. In Texas, the assessed value equates to 100% of market value.

“Clearly, the increases in assessed values in view of declining lease and occupancy rates raise questions as to the appropriateness,” Crosson says. In the CBD, the increases were meted despite conditions that Crosson says amounts to a 3.1% drop in occupancy and 3% decline in quoted rates. Only the trophies seem to have held onto their footing. Preston Center, home to several trophy buildings, experienced a 1.2% drop in occupancy, but a 6.1% dip in quoted rates, Crosson reports.

Today’s trick bag will be for sellers to avert high increases in 2003 since the assessed values are predicated on selling prices. “They better have done their job and due diligence in plugging in a tax price that’s based on a sale price,” he said of transactions such as the recent 5950 Sherry Lane sale in Preston Center where the cash register rang up well above $194 per sf.