Frequent readers of our Minnesota Commercial Property Tax Appeals Blog know that we recently wrote about reductions in commercial property tax bills in Michigan a few years ago.
Owners of commercial properties on which big-box retail stores sat in Michigan’s U.P. were able to get their tax bills lowered by arguing that the market values of their commercial properties should be the sale price of similar-sized retail buildings – that are vacant. The owners of the properties pointed out that the vacant buildings are very difficult to sell as-is, after a big-box retail company has moved out. The structures tend to sit empty for long stretches of time.
They argued that their own properties were therefore not worth nearly as much as the tax assessors had said.
The birth of “dark store”
That argument had often been successful in the lower portion of the state following the 2007-2008 recession when retailers’ property values were depressed. The argument was so successful that detractors nicknamed it the “dark store strategy.”
Michigan isn’t the only place where the strategy has been successful: counties in Florida, Indiana and Alabama has also had successful commercial property tax appeals using “dark store.” More successful challenges have been mounted in Wisconsin, Iowa, Ohio North Carolina, Tennessee and Washington.
“Dark store” in the North Star State
Commercial property tax appeals involving big-box retailers can also be successful here in Minnesota.
The logic of “dark store” is persuasive. It begins when the owner of the commercial property custom-builds the big-box store to fit the needs and desires of the user, and the user then pays the owner those construction costs back over a 20-year-plus lease.
We will have more on “dark store” in an upcoming post. Please check back.