The subject property was a 105,654 square foot two-story property owned by a regional Ohio hospital system operating it as a mental health facility with an additional 52,000 SF of medical office space for lease. The property was built in phases between 1979 and 1988 and was in average condition for its age.
The subject property was valued by the county auditor at an excessive valuation that was based the property operating as a multi-tenant medical office property. The property suffered from functional obsolescence issues that precluded the property from operating at the highest and best use that the location would allow – a multi-tenant medical office building to support the adjacent regional hospital. Since the property was originally designed for owner occupancy or single tenancy, there was a lack of common area that would support desirable multi-tenant medical office space. The property’s design was also highly irregular. These factors made the conversion of multi-tenancy uneconomical and thus detracted from the true fair market value of the property as it stood.
Peak 5 Advisors was able to negotiate a significant valuation decrease by showing that the property was improperly valued based on its design and function flaws. Furthermore, Peak 5 Advisors proved that regional market conditions and competing hospital systems put the property’s location at a competitive disadvantage that was not reflected in the auditor’s original valuation. Post-appeal, Peak 5 Advisors was able to deliver an astounding 69.1% reduction in taxes, saving the client approximately $280,000 annually.
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