M id A tlantic Real Estate Journal — Fall Preview — 7
www.marej.com
A ppraisal By Carlo L. Batts, MAI, Rittenhouse Appraisals and The Reduxx Group The New World Industrial Revolution Reshaping Commercial Real Estate
W
feel unprecedented revenue pressure. They’ll need to look for new income sources to pay for essential services, and property taxes represent their most reliable revenue stream. The question isn’t whether property taxes will increase, but who will bear the bur- den. Residential property tax increases face immediate political backlash from voters. Commercial property owners, however, represent a much smaller, less politically orga- nized constituency. I predict that we will see a systematic shift toward com-
mercial properties carrying a disproportionate share of the local tax burden. While Pennsylvania’s uniformity clause requires equal tax rates for all property types, municipalities have other tools – reassessment timing, appeals processes, and valua- tion methodologies – that can shift tax burdens. Preparing for the New Reality This transformation is both an opportunity and challenge. Urban centers reinventing themselves as social hubs will create new asset classes
and investment opportuni- ties. Properties adapting to flexible configurations will outperform those clinging to single-purpose designs. For property owners this means reviewing your port- folio’s current performance and its adaptability to these new facts. Properties able to weather this transition will see significant appreciation. Those that don’t may face declining values alongside increasing tax burdens. State and local government restructuring is inevitable as federal funding streams shrink.
e’re witnessing a New World Indus- trial Revolution –
continued on page 32 The New World Industrial Revolution is reshaping how Americans work, live, and socialize, putting commercial real estate at the center of unprecedented transforma- tion. Property owners who recognize these trends early and position their assets ac- cordingly will thrive. Others Smart property owners are already engaging with munici- pal planning processes, aware that today’s land use and tax policy decisions will determine tomorrow’s property values. The Bottom Line
and smart p r o p e r t y owners need to prepare for what’s on the horizon. The pan- demic econ- omy is over, but what’s
Carlo L. Batts
taking its place is something completely different. We’re not simply returning to the old normal – we’re building an en- tirely new economic ecosystem. Cities and counties are essen - tially blank pages, needing to redefine their economies to fit into this transformed world. As a commercial real es- tate professional who has witnessed markets evolve for decades, I believe we’re expe- riencing what I call a “New World Industrial Revolution.” Just as the original Industrial Revolution radically changed how and where people worked, today’s convergence of post- pandemic realities, AI, and changing work cultures is now propelling similar shifts in our built environment. A New Urban Landscape Takes Shape The office market transfor - mation happening is just the beginning. Urban cores aren’t dying, but we see them being reinvigorated as vibrant hubs filled with fresh retail concepts and experiential venues de- signed for people to interact. Meanwhile, the housing cri- sis pushes us to rethink resi- dential development as costs and affordability continue to drift further apart. Access and job creation are evolving as artificial intel- ligence reshapes industries. Even as work-from-home cul- ture persists, we’re seeing that people still crave in-person interaction and teamwork, but not five days a week in the same location. The Hidden Tax Implications of Federal Policy While industry professionals have focused on the One Big Beautiful Bill’s benefits like 100% bonus depreciation and enhanced tax deductions fa- voring commercial real estate, they’re missing a critical, sub- sequent effect that could alter property ownership economics. As the OBBB reduces federal funding to states and munici- palities, local governments will
Reduce Your Commercial Real Estate Tax Burden
Made with FlippingBook. PDF to flipbook with ease