Big Changes in the Cook County Assessor’s Office
Major changes in the Cook County Assessor’s Office could reshape Chicago’s commercial real estate market. After winning the March 2018 election Cook County Assessor Fritz Kaegi instituted several major reforms. First, Kaegi is promoting greater public transparency at the office, instituting an official visitor log that can be publicly assessed. Second, Kaegi is pushing legislation in the Illinois General Assembly to automate and expedite the renewal of senior property tax exemptions. Kaegi’s goal is ultimately to push for common-sense reforms and win back the trust of homeowners living in Cook County. Kaegi said, “The ultimate test will be if we’re sending out assessments and people say, ‘Yeah, I think that’s about what my house is worth on the market today.'”
Shake-Up for Cook County Commercial Real Estate Industry
Although, transparency at the Cook County Assessor’s Office is well received by homeowners, some changes are beginning to worry those in the Chicago commercial real estate industry. Most worrisome for local landlords, commercial properties in Evanston were recently victims of large increases in their assessed value. Averaging the assessment across all of Evanston’s neighborhoods, the median assessment increased by 21%. However, for several properties in Evanston, commercial property owners saw the Assessor’s estimated value of their buildings double and triple. As a result, other commercial property owners across Cook County fear a potential massive property tax increase could be coming next year.
What Cook County Assessment Changes Mean for Property Owners
Changes to the assessment levels of commercial properties, may be exactly what Cook County homeowners voted for. Residents of Cook County have been feeling a tax pinch after changes to the SALT deduction passed Congress in 2018. For many homeowners, higher commercial property assessments will likely contribute to relatively lower taxes for residential property owners. Conversely, for commercial property owners, the increase will make doing business in Cook County vastly more expensive.
How Will It Influence Office and Industrial Tenants In Cook County
Contrary to the practice in every other county in the state, Cook County already taxes industrial and commercial properties on a higher percentage of their fair market value than single-family homes. In the past, the impact of the different classification of assessments on commercial properties in Cook County was mitigated to a degree by assessed valuations that were often far lower than fair market value of the commercial properties. However, if the Cook County Assessor’s Office continues to increase assessments on commercial office and industrial properties closer to fair market value, the impact on the resulting tax bills will be substantial. Commercial property owners will inevitably try to pass on these costs on to lessees. Consequently, for tenants and savvy tenant reps looking to avoid rising taxes and increases to the cost of doing business, this may be an opportune time to exit Cook County. In conclusion, for commercial tenants in Cook County, the increased assessments in Evanston could be a warning shot, starting a renewed flight to Chicagoland’s lower taxed collar counties.