Hundreds Of Landlords Appeal Assessments Of Boston Offices, But Few Succeed

As Boston's office building owners feel increasingly squeezed after years of high vacancy, they are pushing harder to lower their property taxes. 

Landlords have appealed their assessments for 388 commercial properties in downtown Boston this year, Bloomberg reported, citing city data obtained with a public records request. That figure is 83% higher than the 212 appeals filed last year and more than double the 180 in 2023. 

But as of last month, only 11 of those 388 appeals had been granted, Bloomberg reported. It cited one example in which the city agreed to take nearly $2M off the $14.2M assessment of a building in Court Square owned by KS Partners that is two-thirds vacant. 

“The values have been decimated,” KS Partners founder Kambiz Shahbazi told Bloomberg.

He said the 12% decline in assessed value he has received across his portfolio over the last two years isn't anywhere near the actual drop in value it has experienced in the market. Nationwide, office values are down 37% from their 2022 peak, according to Green Street.

Boston's office market had an 18.8% vacancy rate as of last quarter, according to CBRE. It has risen from 14% in mid-2023 and has more than doubled since the onset of the pandemic, when it stood below 8%. 

The soaring vacancy has led many buildings to fall into foreclosure or sell for a fraction of their prior price. And the plummeting market valuations have raised fiscal concerns in a city where property taxes make up more than 70% of local revenues. 

Assessed values in the city could ultimately drop by as much as 45% from their 2024 values, leading to a $1.7B decline in property taxes paid to the city over five years, according to a June report from the Boston Policy Institute and Tufts University. The report's authors increased the projected revenue drop from the $1.5B they had forecast in a similar report last year. 

Mayor Michelle Wu has sought to mitigate the impact of declining office valuations on city residents by hiking the tax rate on commercial properties, but she has yet to receive approval on the plan. Her property tax bill last year was killed by state senators in December after business groups came out in opposition. She refiled the bill in January, but it still hasn't passed.