Commercial Real Estate Market Isnt Sharing Woes Of Residential Counterpart
Written by Yudislaidy Fernandez on September 11, 2008
By Yudislaidy Fernandez
Unstable conditions in residential real estate aren’t spilling over to the commercial market in Miami-Dade County, the county’s property appraiser says.
The mid-year report indicating the assessment of property values shows a stable commercial market in 2007 and 2008, according to the preliminary assessment roll, said property appraiser Marcus Saiz de la Mora. "The analysis in the market is pretty much flat," he said.
"Commercial properties seem to be stable as of January, with a consistent rate of change, which we have seen in prior years, unlike the residential real estate market," he said. He noted the analysis included January and February.
This year’s wrap-up of commercial values in all 35 municipalities in Miami-Dade plus the unincorporated region indicates an increase of 6.8%, from $55.8 billion in 2007 to $59.5 billion in 2008. The tax base includes all types of commercial properties including retail, office, mixed-use and industrial, as well as vacant commercial and industrial land, he said.
The overall preliminary tax roll countywide declined 2.6%, from $245 billion in 2007 to $239 billion this year.
The overall roll, however, encompasses all properties: residential, multi-family and commercial classes such as retail, office and hotels, he said. It’s determined based on historical data collected the previous year and just the first months of the current year, he said.
The plunge in overall values is a result of the residential market’s decline and adjustments made under constitutional Amendment One, which added $25,000 more to the Homestead Exemption.
While the volatile residential market kept rising during the past five to six years, increasing at a much higher rate than commercial, the rate of change for commercial has remained a constant 4% to 9%, said Mr. Saiz de la Mora, who has been in the property appraiser’s office 24 years.
"The residential and multi-family market now is very flat, reflecting value drop, and commercial is in a more normal rate of growth," he said. "As you break it down between municipalities you see small changes in values."
He said identifying why a municipality’s commercial property values may have a sharp increase or steep fall can take different avenues.
For example, four cities — Bal Harbour, North Bay Village, Virginia Gardens and Sunny Isles Beach — saw commercial property values fall this year.
This abrupt change is typically attributed to demolition because it wipes out the value of the property and any taxes that could be collected from it, Mr. Saiz de la Mora said. He added that when structures are razed, taxing authorities lose revenues because they can’t charge taxes for a building that doesn’t exist.
But that negative value can change a couple of years down the road as the cleared lots are resurrected with new developments, he said. In the long run, the newly-constructed properties gain a higher value.
For example, Bal Harbour, an affluent community with high buying power just north of Miami Beach, had a 2.2% percent drop.
Mr. Saiz de la Mora said this fall in value may be an alert that new commercial-related construction is to take place there.
Meanwhile, in the past year other cities gained significantly in value, such as Florida City with a 32.7% gain, Bay Harbor Islands at 23.7% and El Portal, up 26.5%.
Mr. Saiz de la Mora said the high percentage gain of a municipality like Florida City — ranked highest — indicates the "tremendous" growth in the southern point of the county.
Typically, commercial property values usually grow no more than 9% year to year, he said.
Other cities’ commercial values grew too: City of Miami up 4.2%, Coral Gables 2.3%, Aventura 0.8% and Doral 7.3%.
The assessment reports are delivered by July 1 to the taxing authorities, including the county, each city and the Miami-Dade School Board. The appraiser’s collected data is then used by the local elected officials to set their millage rate.