THK Manufacturing Facility
Manufacturing Facility for a Global Producer of Linear Motion Parts
Property Info
The subject property was a 423,808 square foot manufacturing facility with 47,329 square feet of office space. It was originally built in 1998 with additions added in 2001, 2006 and 2013 and had a weighted chronological age of 13 years. The subject property was in average condition with no deferred maintenance issues and was fully operational.
Valuation Issue
Industrial manufacturing properties are the most likely types of properties to be incorrectly assessed due to the highly specialized nature of each property and the lack of secondary market buyers. Industrial manufacturing properties are much different than most other real estate in that they are typically not investment properties that could be bought and leased for income. They are almost always owner-occupied. Because of their highly specialized nature, the hard use that they normally incur, functional obsolescence issues and the lack of secondary market buyers, market value depreciation is almost always extreme and is very similar to the market value depreciation experienced by automobiles. The problem is that county auditors normally do not take this into consideration when valuing these types of properties. Assessed values are normally based on computer assisted mass appraisal (CAMA) model projections that can be highly inaccurate, especially with industrial properties. In this particular case, the subject property benefited from a tax abatement applied to the cost of the original improvements that had just expired during the year preceding the valuation complaint conducted by Peak 5 Advisors. The county auditor had valued the subject property at $43.31/SF and had never factored in the accelerated depreciation incurred by the subject property due to multiple functional obsolescence issues. Once the abatement rolled off, the tax increase was a shock to the property owner.
Result
Peak 5 Advisors was able to prove that the subject property suffered from multiple functional obsolescence issues that detracted from the true fair market value if it were to sell on the open market. After lengthy negotiations, Peak 5 Advisors was able to secure a tax refund check for the property owner in the amount of $332,154 for two years of property tax overpayments, along with over $160,000 worth of annual property tax savings going forward.
$18,355,700
Prior FMV
42.8%
FMV Reduction %
$10,500,000
FMV Achieved
2.12%
Effective Tax Rate
$7,855,700
FMV Reduction
$166,077
Annual Tax Savings