Tax rate on commercial properties rises 3.5 percent
Increase is the biggest jump since the 2004 fiscal year
While Mayor Bill de Blasio is catching flack for downplaying a property tax increase for many city homeowners, he seems to be saying very little about a property tax hike on commercial real estate.
Earlier this week de Blasio reportedly boasted he was proud of the fact that the first budget of his administration lowered the property tax rate on one-, two- and three-family homes by .18 percent. But due to the fact that the tax assessment on Class 1 properties rose an average of 4.23 percent, those homeowners will be writing bigger checks this year when it comes time to pay their property tax bills.
On the commercial side, though, the property tax rate saw a 3.5-percent bump to 10.68 percent. That’s the largest rate hike commercial properties have seen since Fiscal Year 2004 when the rate jumped 7.05 percent on top of a 9.95 percent increase the year before.
Greg Kraut, a senior commercial broker at Avison Young, said the increase gives the impression that the city is hostile to business.
“What you don’t want to do is have people start talking about the city being non-business friendly. It becomes sort of a self-fulfilling prophecy,” he said. “De Blasio gets elected and immediately raises property taxes. You don’t want to create any environment where you put a blanket over the fire of what’s happening in New York City.”
The assessment of commercial properties rose 8.09 percent, mostly on the back of an increase in market value. The number of properties climbed only 2.45 percent to 6,644 buildings. Kraut said the city should focus on growing the commercial tax base, not increasing the rate.
“The last thing you want to do in a market that’s going as robust as New York City’s is put any additional property tax increases in place,” he said. “Instead what you should be doing is helping out developers and owners with creating zoning to help grow the commercial supply base, which will in effect grow the taxes.”
Regardless of what happens with the tax rate, tax assessments can push bills higher on its own.
Bob Knakal of Massey Knakal Realty Services said the tax rate is really just a political football to be tossed around, one that sends a contrary message to the mayor’s support for a rent freeze.
“On the one hand you say things are so tough there should be no increase in rents, but how can you say at the same time taxes should go up a lot? It just doesn’t make any sense,” he said.
Knakal said the real impact will be felt by multi-family building owners, who will see their bottom lines impacted by higher taxes.
Overall, the city expects to net $20.8 billion in property taxes, a 3.6-percent increase over last year.