20 largest office buildings paid $51 million in taxes
Property owners might gain new appreciation for large office buildings nearby as a result of new research that indicates office towers offset real estate tax obligations for surrounding properties while also providing revenue for the county.
Thomas Dixon of Dixon Commercial Real Estate finds the largest office buildings contributing about $51 million to Miami-Dade in 2017 property taxes.
Reviewing the 20 largest multi-tenant properties within Miami-Dade, findings show how the investment per square foot of rentable space changed from 2016 to 2017. Mr. Dixon sees factors such as a building’s age and whether it was recently sold as influencing its property taxes.
“There is a relationship between the assessment value and what properties sell for,” Mr. Dixon said. “When office buildings sell in the current year or the prior year, it is generally reflected in changes in the assessment.”
He looks at 777 Brickell Ave. as a prime example. “That’s assessed for $304 per square foot of rentable space, but it sold for $140 million, which is substantially higher than the assessment of [approximately] $87 million,” he said.
The 777 building opened in 1978 and features 13 floors with 288,457 square feet of office space. In 2017, the property stands with an approximately $87 million assessment, down 16% from $105 million in 2016, and 777 Brickell Ave. paid $1,904,769 in property taxes.
Generally speaking, Mr. Dixon says, the older the building the lower its property assessment.
“The assessments for office buildings range from a low of $129 per square foot of rentable space to a high of $326 square foot of rentable space,” he said. “The difference mostly is due to the age of the building and location. The older buildings are being assessed at a much lower rate generally than the newer buildings.”
Office buildings in Brickell and downtown generate the most revenue for the county. Mr. Dixon points to the largest contributor at 200 S Biscayne Blvd., assessed at $263 million in 2016 and rising to $400 million in 2017, for providing about $8 million in taxes.
“It makes a big impact on the general fund,” he said. “The important thing to realize is that communities that have large office buildings, the taxes that are paid by large office buildings help offset the real estate tax obligations of other properties.”
In total, the county’s 20 largest office spaces paid $51,180,438 in 2017 property taxes, from a low of $765,322 at 9100 S Dadeland Blvd. to a high of $8,660,920 at 200 S Biscayne Blvd.
Mr. Dixon says his findings show office spaces are more than just hubs of employment: “They’re an employment source and a generator of real estate tax revenues.”
Mr. Dixon foresees more redevelopment of older buildings in the coming year. He said, “We are seeing in the commercial real estate market the redevelopment of underdeveloped sites. For example, along Coral Way we’re seeing sites that had one-story retail buildings being redeveloped with larger buildings. Part of that is because the economics justifies the high-rise buildings.”
Redevelopment can be good since it increases community revenues while not adding the social costs that a given residential building might with residents demanding services.
“As long as the buildings that are being built don’t incur social costs, it’s a wonderful thing,” Mr. Dixon said. “A community that has a large base of office and commercial buildings meets the burden of maintaining the government revenue and not necessarily on people’s individual homes or apartments.”
His findings indicate the importance of large office spaces for a strong community. He said he hopes others take note: “Appreciate the office buildings that we’ve got and encourage more of them if they’re economically justified.”