January 2022 – At the end of December 2021, Santa Clara County Assessor’s office officials commented on the state of property valuation in light of the impact COVID-19 has had on real estate in the area. The article denotes recent increases in value and projected increases in the immediate future, citing recent developments in the early stages of COVID-19. Our recap is here:
In 2020 when COVID-19 initially emerged, Assessors in Santa Clara County were expecting a Great Recession Repeat in terms of property values. To their surprise, the residential and commercial property values surged in 2021 despite the effects of the pandemic. Real estate and business property values increased by $25.4 billion In 2021 to a new record high of $576.9 billion. According to an annual report from the Assessor’s office, the property values had a 4.6% increase over the span of 2020.
County Assessor Larry Stone recalls having only witnessed one year where property values have declined in his 27 years as the Assessor: “What surprises me is the extremely robust development of major high-rise office buildings and residential properties,” Stone told San José Spotlight. “It’s like COVID didn’t exist.” Changes in homeownership and new construction are the greatest drivers of growth in the assessment roll.
While new construction in Santa Clara declined by 21% during the pandemic, the decline can most likely be attributed to government shutdowns, labor and supplies shortages, and setbacks in the development departments. There were still some significant developments in Santa Clara during the beginning stages of COVID-19, such as: the Google subsidiary Planetary Venture, SJSC Towers, and Adobe’s office development.
“You just have a tremendous number of approved developments going on just in downtown San Jose,” Assistant Assessor Greg Monteverde told San José Spotlight. “There was a tremendous amount of investment there, from Adobe Towers to the commitment of the Google (campus)—probably all driven by the fact that we’re going to have a fantastic transit hub in about a decade with Diridon Station being the focal point for it.”
To read the full article from The San Jose Spotlight, click here.
Upon review of the messaging from the County Assessor, our dedicated team of property tax consultants in California provided a different analysis of the values in real-time, given palpable changes in the landscape in Santa Clara County and the rest of California. Ian Doss, Invoke Tax Partners’ Director of Property Tax – West Region, has seen the increases as indication of a different opportunity for California real estate owners and commercial property investors, and possesses an alternate view of the developments discussed in the article:
“While values may have gone up, there has been a change in the office landscape as companies continue to utilize remote work and hybrid home/office schedules,” says Doss. “When looking at the timeline for new developments at the forefront of the pandemic, we can infer that the projects mentioned in the article were approved prior to COVID-19 shutdowns. Attributing those developments to prosperity despite the impact of the pandemic feels like a “rose-colored-glasses” view of the landscape as it stands.”
With a robust client portfolio in Santa Clara County and the surrounding area in Northern California, our team of property tax consultants is seeing very different trends in commercial real estate. Doss notes, “Mid-to-luxury hospitality and office properties have been hit hard. Over time values will bounce back and continue to rise; however, right now there is an abundance of vacancies and business that are closing or moving out of state that should be hurting valuations in 2022 and immediate future.”
The vacancies and closings are presenting California property owners and real estate investors with the unique opportunity to obtain impactful savings via appeal in 2021 tax season and beyond, even with potentially large increases on valuation notices. Through superior market data and a keen understanding of the unique nature of each California asset, we examine every property from multiple angles to develop a comprehensive valuation approach. Paired with the opportunity presented this tax season, this property assessment creates a defensible valuation with documented support and allows us to professionally represent you during the appeal process, achieving particularly impactful tax savings.
Invoke Tax Partners Northern California Team has the experience and expertise to ensure there are no tax overpayments being made on your assets. Speak with one of our California property tax consultants to ensure your assets are taken care of this year.