Denver Assessor Keith Erffmeyer speaks at BusinessDen’s “The Future of Office Event” Sept. 10, 2024. (Matt Geiger/BusinessDen)
Office and apartment buildings in Denver are seeing the steepest drop in valuations this cycle compared with other property types.
Large office buildings, defined as at least 50,000 square feet, saw a median valuation decline of 13% compared to two years ago, Denver Assessor Keith Erffmeyer told BusinessDen. On an individual basis, most buildings are in the range of a 10% to 25% decline.
Apartment buildings were in the same territory, with a median 13.5% decline, Erffmeyer said — or a 10% to 25% drop for most individual properties.
The release of the aggregate numbers comes as Colorado county assessors mail notices regarding individual property valuations to owners around the state by May 1. New property valuations are issued every two years, so increases or declines refer to the change from 2023.
The latest valuations reflect transactions and market conditions within a specific window: July 2022 through June 2024.
While office valuations were down — far from a surprise, given the pandemic’s impact on the sector — that wasn’t necessarily the case for other commercial property types.
“Mixed, I guess, is the best way to put it,” Erffmeyer said of the commercial side.
He said Denver hospitality properties had a median increase of 1%, and retail saw a median increase of 4%.
“They went down fairly significantly (due to COVID), and they’re climbing back up. So they’re starting from a lower point,” he said.
Warehouses were the strongest performing commercial category, with a median 9% increase.
Denver homeowners likely won’t get sticker shock. A red-hot pandemic housing market cooled as interest rates increased. The median change for single-unit residential properties — including standalone homes, townhomes and condominiums — was a decline of 1.5%, Erffmeyer said. Individual properties generally saw between a 5% decrease and a 5% increase.
The changes this cycle are generally more muted than the last one — the valuations released in May 2023. At that time, hospitality saw a 33% jump and retail saw a 16% increase as those sectors rebounded from COVID. Office valuations at that time stayed largely flat, in part because there had been few building sales off which to calculate.
There were more datapoints to go off this go around. Downtown’s Denver Club and The 410 buildings sold for cheap during the two-year period that ended last June, while structures at 1401 Lawrence and Platte Street’s Riverview fetched more respectable sums.
Erffmeyer said office valuations this go-round reflect a “spreading of value” trend he mentioned at a BusinessDen event last fall.
“Certain quality assets, particularly in office buildings, seemed to hold or maintain fairly steady, whereas at the other end of the spectrum, it seemed to almost fall off a cliff,” he said. “And that was really unusual this time around. Usually, kind of a rising tide has raised all boats.”
Valuations are one of three factors that determine how much a property owner pays in taxes. The other factors are the assessment rate set by the state Legislature and the tax rate or mill levy set by various taxing authorities.
Denver property owners who take issue with their valuation have until June 9 to appeal it. Erffmeyer said he asks those doing so to “tell us something that we don’t know about their property.”
“For commercial property, we’re particularly looking for operating statements and rent roll,” he said. “Residential property can be a number of things, from what kind of condition the property is in, to maybe they’ve got a refinancing appraisal that they did, or something of that nature.”
Denver Assessor Keith Erffmeyer speaks at BusinessDen’s “The Future of Office Event” Sept. 10, 2024. (Matt Geiger/BusinessDen)
Office and apartment buildings in Denver are seeing the steepest drop in valuations this cycle compared with other property types.
Large office buildings, defined as at least 50,000 square feet, saw a median valuation decline of 13% compared to two years ago, Denver Assessor Keith Erffmeyer told BusinessDen. On an individual basis, most buildings are in the range of a 10% to 25% decline.
Apartment buildings were in the same territory, with a median 13.5% decline, Erffmeyer said — or a 10% to 25% drop for most individual properties.
The release of the aggregate numbers comes as Colorado county assessors mail notices regarding individual property valuations to owners around the state by May 1. New property valuations are issued every two years, so increases or declines refer to the change from 2023.
The latest valuations reflect transactions and market conditions within a specific window: July 2022 through June 2024.
While office valuations were down — far from a surprise, given the pandemic’s impact on the sector — that wasn’t necessarily the case for other commercial property types.
“Mixed, I guess, is the best way to put it,” Erffmeyer said of the commercial side.
He said Denver hospitality properties had a median increase of 1%, and retail saw a median increase of 4%.
“They went down fairly significantly (due to COVID), and they’re climbing back up. So they’re starting from a lower point,” he said.
Warehouses were the strongest performing commercial category, with a median 9% increase.
Denver homeowners likely won’t get sticker shock. A red-hot pandemic housing market cooled as interest rates increased. The median change for single-unit residential properties — including standalone homes, townhomes and condominiums — was a decline of 1.5%, Erffmeyer said. Individual properties generally saw between a 5% decrease and a 5% increase.
The changes this cycle are generally more muted than the last one — the valuations released in May 2023. At that time, hospitality saw a 33% jump and retail saw a 16% increase as those sectors rebounded from COVID. Office valuations at that time stayed largely flat, in part because there had been few building sales off which to calculate.
There were more datapoints to go off this go around. Downtown’s Denver Club and The 410 buildings sold for cheap during the two-year period that ended last June, while structures at 1401 Lawrence and Platte Street’s Riverview fetched more respectable sums.
Erffmeyer said office valuations this go-round reflect a “spreading of value” trend he mentioned at a BusinessDen event last fall.
“Certain quality assets, particularly in office buildings, seemed to hold or maintain fairly steady, whereas at the other end of the spectrum, it seemed to almost fall off a cliff,” he said. “And that was really unusual this time around. Usually, kind of a rising tide has raised all boats.”
Valuations are one of three factors that determine how much a property owner pays in taxes. The other factors are the assessment rate set by the state Legislature and the tax rate or mill levy set by various taxing authorities.
Denver property owners who take issue with their valuation have until June 9 to appeal it. Erffmeyer said he asks those doing so to “tell us something that we don’t know about their property.”
“For commercial property, we’re particularly looking for operating statements and rent roll,” he said. “Residential property can be a number of things, from what kind of condition the property is in, to maybe they’ve got a refinancing appraisal that they did, or something of that nature.”
