Amid widespread talk of a coming global recession, it’s important to consider how a recession can affect commercial property values. A recent analysis by commercial real estate (CRE) brokers Cushman & Wakefield looks at – among many other things — the impact of a mild recession. This is the type of recession it says is the most likely type to affect the U.S. within the next year.
Their analysts explain that “all real estate is intensely local….Even within each asset class, a large portion will likely outperform our forecasts, and some will likely underperform.”
Not all types of commercial properties are negatively affected
Some types of commercial real estate property that could thrive include:
- Some office buildings
- Grocery and other food-centered retail businesses
- Multifamily properties
It’s also important to note that the value of a commercial property is typically affected by different economic factors than a residential property would be. Those that lose value are the properties that experience a drop in occupancy and payment issues for those occupants who remain. As we noted in our last post, vacancies can affect commercial property values.
The Cushman analysts also note, “The fundamentals of the US economy are sound, which will help limit the magnitude and scope of a potential downturn.” As property values fluctuate, even throughout the phases of a single recession, tax assessors need to adjust their numbers appropriately. It’s crucial to make sure that you’re not being assessed at a higher value than your commercial property is worth.
If you believe that your tax assessment is too high, you can and should appeal the assessment. With sound legal guidance, you can have best possible chance of prevailing in an appeal.