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The Assessor's Dilemma - Elk Grove Township Industrial Assessment Levels

Article:
(This archived article was published in 2013.  More recent data is found inthe articles section of our web site). The Cook County Assessor has a particularly difficult task this year to set reasonable assessments for industrial/warehouse buildings in Chicago’s northwest suburban market.  While this type of property should be one of the most uniform and easy to assess, sale prices have been all over the map.  Seemingly similar buildings are selling for dramatically different prices per square foot and many warehouse buildings have been listed for sale for over two years. We recently came across an industrial building that was clearly over-assessed but demonstrates the range of values the assessor could choose from.  For confidentiality purposes we will not disclose the exact address but the Assessor put the 2013 proposed assessed market value at $66.07 per square foot for this 14,166 square foot industrial building in Elk Grove Township.  We know the property is over-assessed given that it has been listed for sale at $41.50 per square foot for almost two years. No Chicago area commercial appraiser would value a property at $25.00 per square-foot over a list price that hasn't been achieved for two years. To demonstrate the assessor’s dilemma we pulled every industrial building sale from January 1, 2010 to today (including listings) in a one mile radius of the subject. For an industrial property like the subject, the radius could certainly be larger but this limited distance demonstrates the point. A few of the sales are distressed sales and we freely acknowledge we have not done more than a cursory look at the details of each sale.  Below is a summary of sales/listings for warehouse/industrial buildings from 10,000 to 20,000 square feet within one mile of the subject. We also note that the median discount for a listing to sale price is about 20%.
As can be seen in the chart, building sales range from $29.55 per square foot to $75 per square foot for what would appear to be very similar properties within close proximity to each other.  A reasonable case could arguably be made for an assessment level at any point within that range.  The theory of substitution would argue that an educated buyer would look for the cheapest alternative which should be toward the lower end of the range where plenty of product still exist.  Property owners really need to look at their assessments this year.  This has to be one of the most difficult years for the assessors’ office to set assessments.  The potential for a large error is certainly present. Using a highly experienced Chicago tax appraisal firm such as Peterson Appraisal Group, Ltd. can help you achieve a fair assessment.

J. Chie, Esquire

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