Residential is more valuable
In terms of redevelopment potential and economic development, lower tax bills can free up cash for building owners to re-invest into the space to attract more tenants, she said. Or it could encourage the sale of a building since it’s been discounted. So it’s not necessarily a bad thing for the economy.
“I don’t see these falling commercial assessed values as any sign of a doom loop. It’s a resetting of values that’s reflecting the reality of the current market,” she said.
But for next year, taxpayers may notice that, on average, commercial building owners will be paying smaller bills while residential property owners could be paying more than usual.
For example, most Philadelphia homeowners will see a property bill increase, even though the tax rate hasn’t changed.
“A common trend across the country is that we’re seeing commercial values decline as we see residential values increase, which means more of a burden on individual taxpayers who may have a harder time than larger commercial property owners,” Dowdall said.
To keep homeowners in their properties despite rising market values, there’s a slew of programs. For commercial building owners, their only option is to appeal. And as an economic core of the city, there’s a shared benefit to keeping Center City alive, she said.
“Longer term stabilizing the Center City real estate market is in everyone’s best interest,” she said.