Archive for category: General Information

By Eric Owens, Director at Swartz and Associates

If you own or occupy big box or mid box retail, you already know the challenge: assessments often come in far above market reality. In my previous post about big box retail, I explained why this happens – outdated valuation models, contract‑rent reliance, misapplied comps, and low cap rates.

Now let’s talk about the part that matters most: How to actually win the appeal.

Across hundreds of retail appeals, these are the seven strategies that consistently move the needle.

1. Prove Market Rent – Not Contract Rent

Contract rent from a 10-20 year‑old lease is not market value.

Assessors respond when you show:

• Second‑generation rent comps
• Current asking rents for comparable boxes
• Credit‑driven lease structures that inflate contract rent

When market rent is clearly lower, the valuation must follow.

2. Model Realistic Vacancy, Downtime & Absorption

Big box space doesn’t lease overnight.

Your appeal should include:

• Typical downtime for 50,000-150,000 sq. ft. boxes
• Absorption rates for second‑generation retail
• Stabilized vacancy that reflects actual market conditions

Counties often underestimate downtime – correcting it can materially reduce value.

3. Quantify Functional & External Obsolescence

This is one of the most overlooked tools in retail appeals.

Show the assessor:

• Retrofit costs
• Ceiling height limitations
• Loading and parking deficiencies
• HVAC, roof, and mechanical mismatches
• Neighborhood or trade‑area decline

Obsolescence isn’t theoretical – it’s measurable, and it directly impacts value.

4. Use the Right Comparable Sales

The comps that matter are:

• Vacant or near‑vacant big box sales
• Second‑generation transactions
• Alternative‑use conversions (churches, gyms, storage, municipal)

Avoid:

• Credit‑tenant sales
• Build‑to‑suit deals
• Portfolio allocations

Fee‑simple value comes from fee‑simple comps.

5. Support Cap Rates With Current Market Evidence

Retail cap rates have expanded – but many counties still use outdated cap rate studies which show lower capitalization rates.

Your appeal should include:

• National retail cap rate surveys
• Regional broker opinions
• Local sales with verified cap rates
• Adjustments for location, credit, and vacancy risk

A 100-200 bps correction can swing value dramatically.

6. Demonstrate the True Buyer Pool

Assessors often assume a credit‑tenant buyer.

But the real buyer pool for big box/mid box retail is:

• Local investors
• Value‑add buyers
• Non‑retail users
• Municipal or institutional repurposers

When you show who actually buys these assets, the valuation shifts to reality.

7. Present a Fee‑Simple Valuation – Not a Lease‑Driven One

This is the most important point.

Your appeal must clearly separate:

• Fee‑simple value (what the real estate is worth)
• Leased‑fee value (what the contract rent is worth)

Counties often blend the two. Your job is to unblend them – and show the correct standard.

The Bottom Line

Big box and mid box retail can be successfully appealed – often with meaningful reductions – when the evidence is presented clearly and tied to real market behavior.

Assessors aren’t trying to overvalue these assets. They’re using models that haven’t kept pace with today’s retail environment.

Your job is to bring them the data they’re missing.

If your retail portfolio hasn’t been reviewed recently, now is the time.

Swartz + Associates, Inc. (SAI) is a full service property tax firm specializing in the review, analysis and appeals of real and business personal property tax valuations. If you need help with your property taxes, give us a call!

By Donald Swartz, President

Earlier this year, a class action suit was filed against Jackson County, MO relating to improperly increasing residential property values by more than 15% in the 2023 tax year. The suit claims Jackson County violated the Hancock Amendment, which limits the amount of taxes that can be collected in a tax year as compared tot the previous tax year.

There are several aspects to this suit and who can be a part of the Class.

If your 2023 residential valuation increased by more than 15% over the 2022 tax year, you are automatically included as part of the Class, regardless as to whether your appealed that valuation in 2023 or missed the opportunity to appeal. If the taxpayer appealed the valuation and achieved a reduction, the taxpayer is still included in the suit but any monies received as a result of the suit may be reduced, depending on reduction in valuation to the residence.

Additionally, Jackson County recently announced a proposed settlement in the amount of $250 million to those in the Class Action by offering refunds in the form of tax credits to be applied against upcoming residential property tax bills for 2026, 2027 and 2028. However, this settlement proposal requires sign off and approval from the Jackson County Court and the settlement faces significant pushback from various school districts throughout Jackson County. A significant portion of property taxes collected fund the respective independent school districts, some of which are excluded from the Hancock Amendment.

Please note this class action suit and proposed settlement only relates to residential property tax valuations and does not address commercial property valuations and the increases that have occurred in 2023 and 2025.

More Information:

• About This Lawsuit
• Am I a Member of the Class?
• Your Rights and Options
• Case Status and Procedure
• Practical Questions
• Important Dates and Procedural History

As always, we will continue to follow property tax matters affecting our clients and will keep you abreast as updates occur.

Swartz + Associates, Inc. (SAI) is a full service property tax firm specializing in the review, analysis and appeals of real and business personal property tax valuations. If you need help with your property taxes, give us a call!

By David Swartz, Business Development at Swartz and Associates

For over thirty-five years, I have attended and planned many business conferences, but my favorite conference over the last three years has been hosted by the Iowa Association of Business and Industry #ABICon26– and this year’s event was fantastic.

Fantastic for many reasons:

• Theme – Business is a Team Sport
  • Keynote speaker Donna Orender’s message was to “build belief where others don’t believe”. Check out her organization and programs at Orender Unlimited.
  • Coolest Thing in Iowa was awarded to a generator e-power station designed and manufactured by Mi-T-M beating 67 other innovative nominations from all over Iowa. I still stand by my vote for the Pella Windows Steady Set window installation system.
  • Inspirational leadership advice from Iowa CEOs and a gubernatorial candidate.

• Iowa City was the host town and there isn’t a better place to be a fan!
  • Kinnick Stadium – naturally
  • The Stead Children’s Hospital – inspirational
  • Outer space technological advancement – Futuristic

• Opportunity to reconnect and meet many fascinating business leaders.
  • Well planned receptions
  • Great break out topics led by members
  • Conference center space for all needs

Scheduled mid-year, this event helps re-energize my efforts and goals for meeting new prospects and generating creative ideas from speakers and other participants. I hope to visit with this group again in the second half of this year!

Swartz + Associates, Inc. (SAI) is a full service property tax firm specializing in the review, analysis and appeals of real and business personal property tax valuations. If you need help with your property taxes, give us a call!

By Eric Owens, Director at Swartz and Associates

Across the country, big‑box and mid‑box retail properties are being assessed at values that often have little connection to today’s market reality. Even as retailers consolidate footprints, renegotiate leases, and adapt to shifting consumer behavior, many jurisdictions continue to value these assets as if the market were frozen in time.

For owners and occupiers, the result is predictable: inflated assessments, higher tax bills, and unnecessary pressure on NOI.

But the bigger issue is this — most of these overvaluations are avoidable once you understand why they happen and how to challenge them effectively.

1. The Dark Store Debate Has Confused the Playing Field

Many assessors resist market evidence from vacant or second‑generation big‑box sales, arguing that these transactions don’t represent “market value.”

But here’s the reality:

• Most big‑box buildings are built for a single user,
• They have limited alternative uses, and
• Their resale market is dominated by second‑generation buyers, not first‑generation build‑to‑suit tenants.

Ignoring these sales leads to artificially high valuations that don’t reflect true market demand.

2. Contract Rent vs. Market Rent Is Often Misunderstood

A common issue: assessors rely on contract rent from long‑term leases rather than market rent.

For many big‑box and mid‑box stores, contract rent reflects:

• A lease signed 10–20 years ago
• A credit‑driven rate, not a real estate‑driven rate
• A structure that doesn’t match today’s market conditions

Market rent for second‑generation space is often significantly lower, especially in areas with:

• High vacancy
• Declining foot traffic
• Competition from newer retail formats

When assessors capitalize contract rent, the valuation becomes inflated by design.

3. Functional Obsolescence Is Real — and Often Ignored

Big‑box buildings age quickly. Ceiling heights, loading configurations, parking layouts, and mechanical systems often don’t match the needs of modern retailers.

Yet many assessments assume:

• Zero functional obsolescence
• Zero external obsolescence
• Zero cost to retrofit

In reality, the cost to repurpose a 50,000–150,000 sq. ft. box can be substantial — and that cost directly affects market value.

4. Comparable Sales Are Frequently Misapplied

Assessors often rely on:

• Sales of occupied, credit‑tenant stores
• Build‑to‑suit transactions
• Portfolio sales with allocation issues

These are not market indicators for fee‑simple value.

The more accurate comps are:

• Vacant or near‑vacant big‑box sales
• Second‑generation transactions
• Properties sold for alternative uses (churches, gyms, storage, etc.)

These sales tell the real story of what the market is willing to pay.

5. Cap Rates Used by Counties Are Too Low

Retail cap rates have expanded in many markets, especially for:

• Power centers
• Standalone big‑box stores
• Secondary and tertiary locations

But many counties continue to apply cap rates that reflect a different era — sometimes 100–200 basis points below current market expectations.

A low cap rate + inflated income = a valuation that’s disconnected from reality.

What CFOs and Tax Directors Can Do About It

A strong appeal strategy for big‑box and mid‑box retail should include:

• Market rent analysis using second‑generation comps
• Vacancy and downtime modeling that reflects real absorption
• Functional and external obsolescence studies
• Cap rate support from current market surveys
• Fee‑simple valuation evidence, not contract‑rent‑driven numbers
• Sales comparison grids using appropriate comps

When these elements are presented clearly, assessors often have little choice but to adjust the value.

The Bottom Line

Big‑box and mid‑box retail is one of the most commonly over‑assessed property types in the country. Not because assessors are acting in bad faith — but because the valuation models they rely on haven’t kept pace with the realities of today’s retail market.

For owners and occupiers, the opportunity is significant: correcting an inflated assessment can produce meaningful, recurring savings and immediate NOI relief. If your retail portfolio hasn’t been reviewed recently, now is the time.

Swartz + Associates, Inc. (SAI) is a full service property tax firm specializing in the review, analysis and appeals of real and business personal property tax valuations. If you need help with your property taxes, give us a call!

By Gary A. Stone, ASA, Manager at Swartz and Associates

For many businesses, inventory is one of the largest assets on the balance sheet. Companies rely on inventory records for financial reporting, operational planning, and financing arrangements. Most of the time, those records are accepted without question.

However, there are situations where investors, lenders, or prospective buyers require additional assurance that reported inventory quantities and values are accurate. In those cases, an independent inventory audit or verification can provide valuable insight.

Why Inventory Verification Is Important

Inventory often serves as a critical component in business transactions and financing arrangements. Decisions involving significant amounts of capital may depend on the accuracy of inventory records.

Examples include:

• Business acquisitions.
• Due diligence reviews.
• Asset-based lending arrangements.
• Credit facility renewals.
• Shareholder or investor reporting requirements.

When inventory represents a significant portion of a company’s assets, independent verification can help reduce uncertainty and identify potential discrepancies before a transaction is completed.

Common Areas of Review

The scope of an inventory audit depends on the objectives of the client, but typically includes:

• Observation of physical inventory.
• Verification of quantities through sample testing.
• Review of inventory records and reports.
• Reconciliation of physical counts to accounting records.
• Evaluation of inventory valuation methodologies.
• Identification of obsolete, slow-moving, or damaged inventory.

The objective is to determine whether inventory records reasonably reflect the assets that actually exist.

Real-World Applications

In one engagement, an investment group requested independent verification of inventory as part of its due diligence process before completing an acquisition. Because inventory represented a meaningful portion of the company’s value, the buyer wanted additional confidence in the reported balances before proceeding with the transaction.

In another case, a financial institution requested verification of inventory that was being used as collateral. The review provided an independent assessment of the inventory supporting the lending relationship.

Although the circumstances were different, both projects shared a common goal: providing decision-makers with reliable information regarding a significant business asset.

The Value of Independent Verification

Typically, variances are due to process issues, timing differences, recordkeeping errors, or inventory management challenges.

An independent review can help identify these issues and provide stakeholders with greater confidence in the information used to support important business decisions.

Whether supporting a lender, investor, or prospective buyer, inventory verification can be a useful tool when significant financial decisions depend on the accuracy of inventory records.

Swartz + Associates, Inc. (SAI) is a full service property tax firm specializing in the review, analysis and appeals of real and business personal property tax valuations. If you need help with your property taxes, give us a call!