San Francisco is struggling to deal with the ongoing repercussions of the pandemic, like most communities across the world. Most recently, numerous commercial property owners in the city are clamoring for downward tax adjustments. While such requests are common each year, there is concern that the 2021 requests are part of a troubling shift caused by reactions to the COVID-19 pandemic.
There are three factors that create potential worry for regional revenues:
- The pandemic-inspired need for isolation has harmed a number of businesses based on gathering limits. Retail shops, restaurants, hotels, and event venues are all feeling the pinch since March 2020.
- The second factor is the long-term impact of the worldwide shift to working from home. As a result of the need to isolate, some of the largest employee buildings in urban areas sit mostly empty.
- The third factor was an actual population relocation. Because they no longer needed to live close to a building, many job centers experienced people leaving the city in droves.
Downtown areas and business districts that were once filled with people during the day experienced a huge “out-migration”. That meant the lunchtime restaurants and coffee shops that depended on foot traffic suddenly had no customers. Commercial landlords also found significant decreases in the need for office space. According to CBRE, by the 4th quarter of 2021 tenant demand in San Francisco dropped by 56% from pre-COVID19 rates.
San Francisco Taxpayers Want Tax Valuations That Reflect Population Changes
Navigating property ownership in the midst of the pandemic has caused major concerns for San Francisco residents. The declines in worker, resident, and customer populations have directly reduced the value of their property. As a result, the city is experiencing astounding increases in the number of appeals to 2021 property tax assessments. According to an article in Bloomberg City Lab, some of the most noteworthy corporate entities in the city have added their names to the list.
Document management software giant DropBox wants to reduce the value of its building by around 45% as the result of a move to remote operations. The arena hosting the Golden State Warriors, now known as the Chase Center, wants its property assessment lowered by nearly 60%. Westin St. Francis Hotel is requesting a decrease in value of 75%.
All in all, around $50 billion in assessed property values are being appealed. That is a growth of about 25% since the last tax year. Of course, a variety of government services depend upon the revenues collected based on these valuations. It is true that these are only requested reassessments that may not be granted. A population resurgence for San Francisco could also make this a one-year problem.
The truth is, only the future knows whether cities such as San Francisco are experiencing a long-term downward shift in property values.