Just about every aspect of New York City's real estate market has been turned upside down by COVID-19. Commercial property values and tax revenues are down. Landlords are still reeling from the City's moratorium on new eviction and foreclosure actions, and everyone is watching to see what happens next.
To help shed some light on things, this two-part blog series will first discuss COVID-19's impact on New York City's tax assessments and resulting tax revenue. Then, in part two, we will look at how some property owners are thriving based on a pandemic windfall and the outlook for NYC's commercial real estate market going forward.
It's no secret that NYC's hotel industry experienced a sizable decrease in value during the pandemic. The industry overall decreased in value by 20%, and luxury brands like St.Regis and Four Seasons had their assessed values cut by 36%.
Despite these significant drops, New York City was initially reluctant to provide hotels with tax relief, but things are looking up. The New York Hilton Midtown received a 13% tax reduction on the final tax roll, and other hotels may see changes as owners continue to challenge their assessments.
NYC Office Space
The commercial office space market also remains in a state of flux post-COVID. The amount of available office space continued to climb as more companies embrace remote work. With this decreased demand for office space comes a decrease in property values. This year market value for office space dropped by 16%. Some building owners received a tax bill commensurate with that reduction, while others continue to wait for tax relief.
Impact On Tax Revenue
Property taxes are the City's largest source of revenue. Because of the decline in property values this year, New York City expects its property tax revenue to drop by $1.6 billion. That represents the most significant decline in revenue since the 1990s, and it will likely mean a reduction in some social service programs as well.
Need Help With A Commercial Real Estate Issue?
If you need sound real estate advice in New York or New Jersey to help you during these fluctuating times, Melvin Monachan, PLLC is here to help. Call us now at (347) 389-1682 or go online to schedule an appointment.
Interested in learning more? Find part 2 of this discussion here (link to part 2)