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Midtown buildings reduce taxes by 9%.

Reflecting the decline in commercial property values, most owners of Midtown Manhattan office buildings have seen the property taxes they pay to city government decline this year, according to an analysis performed by CB. Commercial Real Estate Group, Inc.

Local property tax assessments have declined since last year at 79 percent of the Midtown office buildings sampled by CB Commercial. The average decline was 8.6 percent, but some buildings saw their tax assessments cut by as much as a third.

Properties in the East Midtown South business district had by far the largest average tax reduction -- 22.15 percent, according to CB Commercial. Above-average declines also occurred on Columbus Circle (12.22 percent), Third Avenue (12.01 percent), and Park/Lexington Avenues (9.12 percent).

"Midtown office buildings are the bellwether of the local marketplace, and the prolonged erosion of local real estate values is being borne out in the taxes assessed on these buildings," said Steven A. Swerdlow, executive vice president and managing officer for CB Commercial in New York. "The lower tax assessments, in turn, are giving landlords breathing room to structure lease terms which provide tenants with market-rate rents, and, for the first time in three years, begin to arrest the decline in cash-flows generated by new leases."

In today's marketplace, the net cashflow from new leasing available to building owners -- after real estate taxes, operating and transaction expenses -- is too low to support debt service, Swerdlow added.

CB Commercial surveyed more than 150 Midtown office buildings in analyzing property tax assessments.
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Title Annotation:owners of Midtown Manhattan, New York, New York office buildings paying lower property taxes due to declining property values
Publication:Real Estate Weekly
Date:Jul 21, 1993
Words:256
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