The economic fallout of the Covid-19 pandemic has had a negative effect on virtually all of the nation’s economy, including income-producing commercial properties. Owners of those properties now have tenants contending with steep declines in revenue that can mean bankruptcy, eviction or closure.
This means that many owners of commercial properties featuring retail outlets now face declining occupancy rates and income, which can lead to a lower property value. According to an article by Bloomberg Tax, it might also mean that owners will be able to find financial relief through commercial property tax appeals.
Brightening the future
A successful tax appeal can result in substantial savings by reducing expenses for years.
One of the hardest hit segments of the economy are income-producing properties such as shopping centers. Even some big-name retailers are withholding rent as they try to negotiate new terms. Of course, the owners of those properties continue to have their financial obligations such as debt service and maintenance.
Pre-pandemic difficulties
Some retailers were struggling in the battle against online shopping before the pandemic. The virus-related lockdowns have many now regrouping with bankruptcy and store closures, with more expected to follow suit.
Of course, when a shopping center loses an anchor tenant, there’s often a downward ripple effect on the former anchor’s neighbors in the form of reduced foot-traffic from potential customers and revenue.
Owners of these retail-intense properties are likely looking at reduced occupancies coupled with increases in the amount of time to fill those vacancies – and reduced rents for new tenants.
We will continue our look at the pandemic’s effect on income-producing commercial properties in an upcoming post to our Minnesota Commercial Property Tax Appeals Blog. Please check back.