Case Study: South Texas Office
During the construction of a new, Class A corporate headquarters, our client, heavily reliant on commodity pricing, faced significant economic challenges.
The negative impact of economic factors on the property’s buildout introduced the concept of economic obsolescence, which posed a unique negotiation hurdle.
Negotiating economic obsolescence, a complex form of depreciation influenced by various economic factors, presented a particular challenge for a brand new office building. In this case, the design-rated 100,000 square foot office was subject to the county’s specific vacancy rates and income approach. Due to adverse market conditions, a small section of the building was postponed until commodity prices rebounded, necessitating a strategic plan.
This negotiation took place in a South Texas county where we had established a substantial property presence. By maintaining positive professional relationships with local assessors, we were able to leverage our goodwill and rapport built over decades. Our strategy centered around utilizing this relationship to ensure that unique circumstances, such as the economic challenges impacting the construction, were considered in the appraisal process.
Through our established relationship with the local assessor, we effectively argued for the application of economic obsolescence, resulting in a $20,000,000 reduction in the assessed value of the property. This significant adjustment led to tax savings exceeding $500,000+. By navigating the intricacies of economic obsolescence and leveraging our long-standing relationship, we successfully secured substantial tax savings for our client.