CHARLOTTE, NC (Steve Harrison and Ely Portillo/The Charlotte Observer) - The value of commercial property in Mecklenburg County is surging, based on an early review by the county assessor's office, which is revaluing more than 300,000 pieces of real estate this year.
The rapid increase in the value of offices, apartments, shops and retail buildings could give homeowners some property tax relief next year, as Mecklenburg reallocates tax burdens throughout the county. If city and county budgets remain similar, and a larger share of the money comes from commercial property owners, homeowners might pay less.
While commercial property is up by an average of 74 percent since 2011, residential property has only increased by 29 percent, the county said.
When the city and county set their budgets and tax rates in the summer of 2019, commercial properties will likely make up a bigger piece of the tax base. Some homeowners could see their property taxes remain flat or even decrease, depending on how much money the city and county want to raise.
For most homeowners, the tax value of their home will probably increase. But that doesn't necessarily mean higher taxes.
The city and county each set their own property tax rates. If they choose to raise the same amount of revenue as in 2018, they would have to "roll back" the property tax rate next year, to account for the higher tax values. The City Council and Mecklenburg commissioners, however, could choose keep the tax rate the same, which would likely increase their budgets – and the amount property owners pay – significantly.
Assessor Ken Joyner said his office has reviewed about 10 percent of the county's commercial property, mostly in north Mecklenburg. They have not yet assessed uptown commercial real estate or SouthPark, which are both booming.
Assessors have reviewed homes in about half of the county's neighborhoods. Those are scattered throughout the county, though a map provided by the county shows they haven't assessed residential property in uptown or the many of the close-in neighborhoods – areas that have seen some of the biggest jumps in price over the past few years.
Charlotte's real estate market has changed dramatically since the 2011 assessment, in the aftermath of the 2007-08 financial crisis and ensuing recession. Ballantyne Corporate Park sold last year for almost $1.2 billion, the largest real estate deal in Charlotte's history.
Recent commercial sales throughout the county show how hot the real estate market has become, and how commercial properties of all types are selling for well above the values they received in 2011.
One Wells Fargo, the uptown "jukebox" tower, sold in 2016 for $284 million, more than 66 percent above its assessed value. The three-building Harris Corners office park off W.T. Harris Boulevard sold late last year for $58.5 million, 40 percent higher than their assessed value.
Down the street, on Statesville Road, an industrial building assessed at almost $6 million sold for $11.6 million.
In late 2016, a Kuwaiti-backed investment firm paid $78.5 million for the Loft 135 apartments just south of uptown, almost double the assessed value of the property. A Four Points Sheraton hotel on Woodlawn Road sold last year for $13 million, about 50 percent more than the assessment.
Joyner did not discuss in detail the early residential assessments, but it's likely that neighborhoods close to uptown will see significant increases compared with more suburban areas.
Many buyers are snapping up older houses near uptown to renovate or tear down, and property values in these areas have risen rapidly. A Sylvania Avenue house, just north of uptown, sold for $345,000 last year, property records show. That's almost triple the $120,800 tax assessment. West of uptown, a house on Woodruff Place sold for $400,000, more than 2.5 times above its assessed value.
Joyner, who became assessor in 2013, gave Mecklenburg Commissioners an update on the 2018 revaluation Thursday during the county commissioners' retreat. This is the first assessment since the 2011 review, which came under intense criticism from homeowners and the state.
After property owners complained of unfair value changes, the county hired Pearson's Appraisal Service to review contested valuations, and changed many of them in response. After thousands of appeals were heard, the value of all property in Mecklenburg increased by 11.6 percent during the 2011 assessment.
Joyner told commissioners his office has tried to simplify the process, and to have more quality control in the assessor's office. A citizen's review group will also be meeting to review the assessment, starting in April. The county has also commissioned an independent "income-producing market study" to help it determine how much commercial real estate is really worth.
Under the county's system for the 2011 review, the assessor's office would have 11 different categories for residential property, depending on how well it had been maintained. There are now just two classifications.
"We are going back to basics," Joyner said.