City overestimates “market value” of Time Warner office condo by $389M

Figure grew to $944M this year from $492M in an apparent error
May 31, 2016 11:10AM

The Related Companies’ office condominium at 10 Columbus Circle may be valuable, but the city seems to have accidentally overshot the mark.

The Department of Finance agreed to lower the “market value” it uses to assess taxes on the property by about $389 million after the landlord pointed out a mistake by the agency, to $555 million, the New York Post reported.

Related developed the two-tower, 2.8 million-square-foot Time Warner Center in 2003.

Time Warner owned and occupied the 1.1 million-square-foot office condo at 10 Columbus Circle until it sold the property in 2014 to Related for $1.3 billion, with plans to move to a 1.6 million-square-foot office condo at Related’s 30 Hudson Yards, which is slated to open in 2019. In the meantime, the media conglomerate leased the space from Related.

City officials, apparently misunderstanding the nature of the transactions, used an unusually low cap rate of 6.88 percent to gauge the property’s value, which they rated at $944 million — nearly double its $492 million “market value” the previous year.

The city’s assessed “market value” is often significantly lower than a property’s true market value, if it were to sell. [NYP]Ariel Stulberg