The DCAD 2007 Retail
Revaluation
by Paul Pennington
www.pennin.com
In 2007 the Dallas
Central Appraisal District (DCAD) reappraised its retail properties, which
commonly resulted in valuation increases of 50% to 300%. Listed below is the
apparent reasoning behind such an aggressive reappraisal.
We will also analyze the DCAD conclusions and compare them to independent
third party published studies. Additionally,
we will address what the effects of such dramatic increases in the 2007 retail
valuations had on tenants and property owners. Finally,
we will discuss the measures a property owner took to limit their tax liability
and to protect their tenants’ from excessive property tax “pass-throughs”.
The
Revaluation:
DCAD determined that retail properties were under appraised and decided to reappraise them for tax year 2007. Based on data collected, and summarized in the DCAD 2007 Shopping Center Sales/Cap Rate Study (the study), property owners were notified of their 2007 proposed valuations.1 The study, which was obtained through a formal open records request, represents the source documentation of the Rates used by DCAD.
Chart
1
DCAD 2007 Shopping
Center Sales / Cap Rate Study
|
BC |
|
Square
Feet |
Year
Built |
Sales
Price |
Cap
Rate |
|
Comments |
|
|
|
|
|
|
|
|
|
|
36 |
02/05 |
22.496 |
2003 |
$6,272,000 |
6.69 |
$278.81 |
|
|
35 |
06/06 |
26.418 |
1998 |
$6,500,000 |
5.71 |
$261.19 |
|
|
36 |
09/05 |
171.028 |
1985/65 |
$53,000,000 |
5.67 |
$309.89 |
|
|
36 |
04/05 |
133.088 |
1987 |
$19,000,000 |
4.995 |
|
Two
Story |
|
36 |
10/06 |
134.953 |
1987 |
$31,300,000 |
4.47 |
$231.93 |
Income
is actual |
|
35 |
12/05 |
38.788 |
1999 |
$14,000,000 |
7.1 |
$360.94 |
|
|
36 |
11/06 |
46.8 |
1999 |
$9,500,000 |
|
$202.99 |
|
|
35 |
09/05 |
32.114 |
1999 |
$7,100,000 |
|
$221.09 |
|
|
36 |
10/06 |
178.121 |
1983 |
$6,700,000 |
4.33 |
|
60%
Vacant At |
|
36 |
12/06 |
324.569 |
1952 |
$42,400,000 |
4.92 |
|
|
|
36 |
06 |
43.885 |
2005 |
$13,600,000 |
|
$309.90 |
|
|
35 |
03/06 |
28.794 |
2005 |
$3,640,000 |
6.59 |
|
Two
Story |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
5.608333 |
$272.09 |
|
|
|
|
|
|
Median |
5.67 |
$278.81 |
Chart
2
|
BC |
|
Square
Ft |
Year
Built |
Sales
Price |
Cap
Rate |
|
Comments |
|
|
|
|
|
|
|
|
|
|
36 |
05/05 |
233,667 |
1987 |
$22,785,202 |
6.29 |
$97.13 |
All
Big Box |
|
36 |
04/06 |
140,934 |
1985 |
$14,091,791 |
6.87 |
$100.00 |
80k
+ SF Big Box |
|
36 |
02/06 |
121,369 |
1986 |
$11,500,000 |
5.9 |
$94.75 |
50%
Big Box/Theater |
|
36 |
09/05 |
92,270 |
2003 |
$16,232,750 |
4.995 |
$175.93 |
Mostly
Big Box |
|
36 |
04/06 |
69,090 |
1995 |
$8,265,856 |
4.47 |
$119.54 |
95%
Big Box |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
6.353333 |
$117.49 |
|
|
|
|
|
|
Median |
6.29 |
$100.00 |
Chart
3
Small
Retail
|
BC |
|
Square
Ft |
Year
Built |
Sales
Price |
Cap
Rate |
|
Comments |
|
|
|
|
|
|
|
|
|
|
35 |
02/05 |
14,820 |
2003 |
$3,325,000 |
4 |
$224.36 |
|
|
35 |
08/05 |
9,198 |
2001 |
$1,930,000 |
7.49 |
$209.83 |
Estimated
Some Income Factors |
|
35 |
06/05 |
11,879 |
1960 |
$3,887,700 |
5.72 |
$327.28 |
Estimated
Some Income Factors |
|
35 |
06/05 |
17,245 |
1995 |