By: Layne Farr – Senior Manager, Real Estate
In tax year 2022, the average assessed value of a stabilized Class A distribution center in Denton County, Texas was $57 per square foot (PSF). The Denton Central Appraisal District documented around a dozen distribution warehouse sales north of ~$95 PSF in 2021 and 2022. Consequently, notified values of these assets in the 2023 tax year commonly surpassed +$110 PSF. Appraisal review board hearings mitigated what were initially ~100% increases, bringing them down to an average of $80 PSF in 2023. Secondary appeal litigation proceedings for 2023 have been fruitful when pursued and resolved; however, they remain rare. Only 10 of 74 stabilized assets have achieved further reductions via lawsuit resolutions (as of 2/15/2025), with YoY increases still ranging between 20% and 35%. Now, two years removed from the 2023 tax season—with post-ARB 2024 values holding steady at 2023 levels— it appears these substantial increases have stuck.
The graphs below visualize assessed values per square foot against the net leasable area of nearly 80 Class A distribution centers in Denton County, not limited to the red-hot Alliance market, currently the most coveted in all DFW.
In the first graph, the dark blue points represent 2022 values, while the orange points represent 2023 values. It is important to visualize assessments across the tenfold range of warehouse size in this market. A negative correlation exists between the net leasable area and price per square foot – larger warehouses tend to have lower price per square foot values. In 2022, the average assessment was $57 PSF with a $10 PSF standard deviation. In 2023, the average assessment increased to $80 PSF with a $9 PSF standard deviation. When comparing the 2022 data directly to the 2023 data, the YoY delta between smaller and larger warehouses differs slightly. Warehouses smaller than 500,000 SF increased on average by about +$24 PSF YoY, while warehouses larger than 500,000 SF saw a slightly smaller average increase of +$19 PSF YoY.
The second graph compares 2023 values (orange) with 2024 values (purple). This graph indicates that, after the 2024 ARB season, assessed values remain all but unchanged from 2023, maintaining an average of $79–$80 PSF. However, it is important to note that the average notified value in 2024 by the Denton Central Appraisal District for a Class A distribution center was $97 PSF. Though this notified value was about 12% less aggressive than the $110 PSF notified average in 2023, it still aligns with undeniable sales indications in the market.
It is safe for Denton County industrial real estate owners and investors to expect notified values reaching +$100 PSF in the 2025 tax year. Appraisal review board and litigation proceedings will likely mitigate these increases to an extent, but finalized values will most certainly reside somewhere between the $80 PSF floor established in 2023 and 2024, and the notified value ceiling established by market sales. For this reason, we highly recommend partnership with an experienced property tax firm to help best navigate the more than likely increases upon receipt of your notices of value in April. Learn more about expectations across all asset classes for the 2025 Texas appeal cycle, and view key dates and deadlines, here. Contact Invoke Tax Partners when you are ready to discuss your Denton County portfolio.
