Commercial property owners in the southern half of Minnesota will understand sentiments recently expressed by the head of a Northland property management firm who said the “residential (housing) market is booming . . . but the absolute inverse has occurred for commercial properties because of the pandemic.”
Pressure pushing down
Sandy Hoff, president F.I. Salter Co. Inc., told the Duluth Tribune News that “there’s downward pressure on rent and income. There’s increased vacancy in many, if not all situations.” As a result, he said, commercial property owners haven’t been able to invest in maintenance.
Yet St. Louis County commercial property owners “saw little reflection of hard times in the assessed values recently assigned to their holdings,” the newspaper reported. Instead, “many assessments held steady or even increased.”
Sixty-six St. Louis County property owners – the “vast majority” involving commercial properties – are challenging the assessments.
Pandemic eroding value
Some commercial property owners contesting the assessments argue that the Covid-19 pandemic has decreased the values of their properties.
One of those making that argument is Simon Property Group L.P., owner of Miller Hill Mall.
The county says the market value of the mall has held steady at $35.3 million. But the Tribune News points out that two anchors (Sears and Younkers) have departed and that the mall’s shopping traffic is down.
Big box, big objections
Also filing tax court petitions are well-known big-box retailers: Menards, Fleet Farm, Kohl’s, Lowe’s and Gander RV & Outdoors.
Mary Garness, St. Louis County’s director of public records and valuation said the county tries “to stay pretty consistent with the big boxes, in terms of the value per square foot.”
She said the assessor’s office strives for accuracy. “You try to do your best to determine value based on sales, based on the quality of the structure and other qualitative and quantitative factors,” she said. “But until there’s an actual sale or there’s more detailed information that we derive, it’s hard. It’s difficult.”
We’ll have more about Northland commercial property taxes in an upcoming post to our Minnesota Commercial Property Tax Appeals Blog. Please check back.