The Cobb County tax assessor is gearing up to send out 2013 assessment notices to all property owners in Cobb County, Georgia. Last year the Cobb County tax assessment notices came out two weeks after the Gwinnett County notices and we'll see if that happens again. Gwinnett County was sending out their 2013 notices on Friday, April 5. Last year we filed our Cobb County property tax appeals very early during the 45 day appeal period and our board of equalization hearings were scheduled very early in the process. You can realize tax savings quickly if you do the same.
There's a good chance that the Cobb County tax assessor will be looking at flex/warehouse properties for the 2013 revaluation adjustments. According to Real Estate Research Corporation (RERC), institutional investors see the industrial sector as a good investment and they suggest that as the economy improves the industrial sector has the most potential upside. However, the flex sector was not seen as desirable as the industrial warehouse sector. According to CBRE, industrial vacancy declined to 12.8% during the fourth quarter of 2012, and over the past two years the industrial market has shown a steady decline and availability.
According to RERC, going in capitalization rates for flex buildings are 8.4% on average in the Atlanta Metropolitan region. This is a tie with hotels, also at a cap rate of 8.4%, for the highest cap rate of all commercial property classes surveyed. These numbers reflect first tier investment properties that are new or newer quality construction in prime to good locations. For second tier properties, or properties that are aging former first tier properties in good to average locations, going in cap rates in the South region of the country average 8.9%. For third tier properties, or older properties with functional inadequacies and/or marginal locations, the going in cap rate for flex properties is 9.8% on average. RERC only has data for specific metro areas for first tier properties and then large regions for the second and third tiers.
Realty Rates is another company that does market research and puts out their own estimates of capitalization rates. Realty rates shows that the average surveyed capitalization rate for flex and R&D properties is 10.39%. Rates derived via the debt coverage ratio or band of investment techniques are slightly lower at 9.63% and 10.25%, respectively. Realty rates shows a cap rate range for flex and R&D properties from a low of 6.46% to a high of 14.47%. Realty rates does not have a survey for the Atlanta area, or the South region, but they stand by their numbers and say with some certainty that their results apply to most if not all market areas.
The Cobb County tax assessor is pretty aggressive with the values they use to tax real estate owners in the County. Last year we had a retail client that had his neighborhood retail center double in value from $3.4 million to $6.8 million. Although the Cobb County commercial appraiser offered a reduction upon appeal, it was a token reduction that didn't really correspond with reality of the financials. After a good presentation before the Board of Equalization, we were able to get the value reduced back down to where it started. They were not as aggressive with their industrial flex properties, but we managed to obtain some nice reductions on those properties as well.
If the Cobb County tax assessor increases the value on your flex warehouse property and you need someone who is familiar with the Cobb County property tax appeal process, has a working relationship with the Cobb County commercial appraisers, and experience with the Cobb County Board of Equalization, contact us at Fair Assessments and we'll be happy to take a look at your situation and give you an estimate of how much money you can save through a Cobb County property tax appeal.
