Taxable values, tax bills keep falling for Miami's core office towers
By Anne-Margaret Swary
Both taxable values and tax bills for most downtown office buildings have declined in 2011 with the exception of a handful of new office buildings that have come online in the past year.
An analysis of 11 major office buildings in downtown Miami and Brickell shows assessed values at existing buildings have continued their descent — anywhere from half a million dollars at 777 Brickell Ave. to $6.7 million at the Wachovia Financial Center, 200 S Biscayne Blvd., according to online property records.
In general, the declines were not as steep as those from 2009 to 2010, when the Wachovia center — Miami's second-tallest building — saw a $20.7 million drop in assessed value.
One of the most important factors in assessing the taxable value of a commercial property is the income the building generates. In the case of office buildings, income is derived from rent charged to tenants.
"We've had a dramatic decline in the number of people employed in white-collar jobs, which represents a decline in demand for office space, even though we've had a lot more space added," said Tom Dixon, president of Dixon Commercial Real Estate. "The real problem is that they've added so many new buildings, which has affected directly the occupancy rates."
As a result, downtown and Brickell office buildings are generating less income.
The 27-story building at 1221 Brickell Ave. experienced a larger decrease in its taxable value this year than in 2010. It dropped $6 million to $74.5 million in 2011 compared to a more modest $800,000 decline from $81.3 million from 2009 to 2010.
Miami Tower at 100 SE Second St. saw one of the largest two-year declines after the Wachovia Center, dropping a total of $13.4 million from 2009 to 2011. The assessed value of the 600,000-square-foot tower is now $86.1 million.
One Biscayne Tower at 2 S Biscayne Blvd. is unique in that it increased in taxable value from $121 million in 2010 to $122.7 million in 2011. However, the property benefited from $3.1 million in cap savings rolled over from 2008 or 2009 to last year due to a state law capping annual assessment increases at 10% for non-homesteaded properties, explained Marcus Saiz de la Mora, Miami-Dade deputy property appraiser. Without this rollover savings, the taxable value would have been $124 million in 2010 and this year's taxable value would have actually decreased.
SunTrust International Center at 1 SE Third Ave. also saw a $450,000 increase to $71.8 million after its 2010 taxable value was adjusted to $71.35 million from $76.7 million.
Other exceptions are Miami's three newest office buildings: Brickell World Plaza at 600 Brickell Ave., 1450 Brickell Ave. and the Wells Fargo Center at 345 SE Second Ave. Because they were not issued certificates of occupancy last year until after Jan. 1, the properties were only taxed on their land values for 2010. While 600 Brickell is still preparing to come online, the other two buildings are now contributing a combined $246.9 million to the 2011 tax rolls. The land at 600 Brickell Ave. is valued at $12.8 million, property records show.
Regardless of how much their assessed values changed, all of the existing office buildings are poised to see a decrease in their taxes thanks to lower millage rates this year, unlike in 2010, when higher property tax rates counteracted the decline in values in many cases, leading to higher tax bills.
The county's adopted operated millage last year was 6.1565 compared to its proposed rate this year of 5.2695, said Pedro J. Garcia, Miami-Dade property appraiser. Miami's millage rate is following the same trend, with a proposed rate of 8.979 compared to 9.1441 last year.
The owners of Wachovia Financial Center probably will pay about $556,000 less in taxes this year as a result of the lower millage rates, bringing their total tax bill to $6.1 million.
The tax bill for 701 Brickell Ave. could decline more than $292,000 to $3.95 million.
Also seeing a sizeable decline is the Sabadell Financial Center at 1111 Brickell Ave., estimated to drop $258,000 to $3.16 million
The newly constructed Wells Fargo Center and 1450 Brickell Ave. are estimated to pay about $3.2 million and $2.2 million taxes, respectively.
Preliminary 2011 tax rolls, Mr. Garcia said, show taxable values for all commercial properties in the county have dropped $926 million to about $36.37 billion, a 2.5% decline.
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