HOUSTON – A hefty hike in commercial property values in urban areas became a reality on the tax roll in Texas this week as the deadline to file property appraisal protests passed on Monday.
Commercial property in the Houston area, in particular, had significant gains over the last year.
The Harris County Appraisal District, the agency that appraises all Houston-area private properties for tax purposes, has increased appraisals by more than 20 percent on many commercial properties, resulting in excessively high tax bills in 2014, says Matthew Deal of Deal Sikes & Associates, a Houston real estate valuation firm.
“The Houston commercial real estate market boomed in recent years as strong job growth fueled demand for office space, multifamily and other types of commercial property,” said Deal. “Values for Houston area properties increased in 2013. However, HCAD’s mass appraisals tend to be inconsistent and there can be a marked disparity between the agency’s appraisals and market value.”
Across the county, the initial appraised values for multifamily properties were increased by HCAD by 22 percent over 2013 levels, the largest increase of any commercial property type. HCAD increased office building values by 17.8 percent; retail property values by 18.5 percent and commercial land by 21.4 percent.
“Undoubtedly, Houston’s commercial land prices have increased over the last year. Growth in employment and population have applied upward pressure on residential land prices,” said Mark Sikes, principal of Houston-based Deal Sikes & Associates. “However, every parcel of land should be evaluated on an individual basis, considering the changing characteristics that make it unique. The mass appraisal method often does not reflect market value.”
Since typical tax protest deadline of May 31 was on a weekend, the deadline moved to the next business day, which was Monday, June 2.
“Most property tax appeals are successful for several reasons. First, the appraisal district’s records are only in fair condition. There are multiple errors with regard to grade, condition, level of remodel, building size and other factors for many if not most properties,” said Patrick O’Connor of O’Connor & Associates, a Houston firm that handles thousands of protests. “ Due to the volume of property tax appeals, most appraisal districts prefer to resolve protests at the informal hearing.”