History has shown that the market can sink into a recession just as quickly as it can recover. Property owners typically feel these fluctuations more acutely than others, since everything from stock market volatility to revised local budgets can affect real estate values.
If you own an industrial property, your assets are unfortunately far more vulnerable to market fluctuations than residential properties. When local governments face budget shortfalls, they frequently look to commercial and industrial real estate to make up the difference. Luckily, industrial property owners can use strategic planning and the Texas Property Owner Rule to protect themselves.
One of the best ways to protect an industrial property from market fluctuations is to increase its inherent utility and value. A highly functional, modern industrial space is far more likely to retain its value, remain rented out, or be accepted as collateral for a loan during a downturn.
One of the most overlooked variables in industrial property value is ceiling height. Properties with ceilings that are at least 18-feet high (or higher) are in significantly greater demand than older buildings with lower clearances. Higher ceilings mean more vertical storage and potential uses for the property, making it more resilient to economic shifts.
If you are leasing your industrial property to another company, it does not mean they handle all the problems that arise. As the owner, you still have to ensure the safety and usefulness of the property. When a lease is up for renewal, it is critical to review market rates and consider a rent increase to ensure the lessee is shouldering an appropriate portion of the economic burden.
It is also worth noting that the value of a property can change drastically depending on its intended use. If economically feasible, getting a zoning variance to convert an older industrial property into flex-space, a data center, or another type of commercial property can drastically increase the building’s resilience.
If you own or operate an industrial property, there is a very good chance you have a business account with a local bank. It is important to nurture this relationship before you need to rely on it. Getting to know your banker means they will care more about helping you succeed. During a recession, this relationship can yield everything from sound financial advice to a crucial loan extension.
Take the time to meet with your banker at least once every quarter. While these meetings should cover finances and cash flows, their primary purpose is to stay in your banker’s good graces should you ever need assistance in the future.
When local and state economies suffer due to market fluctuations, politicians are often far more willing to increase industrial property taxes than residential ones. While you cannot alter the overall tax rate set by the county, it is highly possible to have your industrial property’s assessed value decreased.
Statistics consistently show that a majority of commercial and industrial properties in America are over-assessed. This means most property owners are paying more in taxes than they legally owe based on true market conditions.
This is why a property tax protest is critical. Industrial properties are complex; they suffer from functional and external obsolescence that county mass-appraisal models simply cannot calculate accurately. Because of this, you should seek out an independent valuation and exercise your legal right to appeal.
By ensuring you are not overpaying on your industrial property taxes, you keep vital capital on hand to survive inevitable market fluctuations.
Our dual-licensed attorneys specialize in complex commercial and industrial tax appeals. We utilize an income-approach focus to achieve average client savings of over $9,000 per year. No retainer required.
Start Your Commercial AppealBrandon and his team have proven they can perform with any product type we give them,
from industrial and office property to single and multi-family residential.
At a critical time when a property was in lease-up, we were faced with an unreasonable and unjustified assessment.
Brandon’s tenacity and responsiveness resulted in a fair assessment and the largest value change I've seen in my career.
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