October 8, 2026
NYREJ: The importance of market value and timing in commercial property tax cases
Commercial real estate has changed dramatically over the past several years. Inflation, rising operating expenses, elevated borrowing costs, changing occupancy patterns and increased investment risk have altered the economics of owning commercial property.
Yet property assessments do not always change as quickly as the market they are intended to reflect. When assessments fail to account for these changing conditions, property owners may be paying taxes based on values that no longer reflect economic reality.
The New York State Department of Taxation and Finance’s most recent market value survey underscores the issue. Only 55.9% of assessing units statewide had assessment rolls meeting the State’s standards for uniformity, down considerably from a peak of more than 80% in 2004. For commercial property owners, that should be a reason to take a closer look at their assessments.
New York’s property tax system is highly decentralized. Municipalities employ different assessment practices, reassessment schedules and levels of assessment. On Long Island alone, Nassau County operates under its own classified assessment system, while Suffolk County contains ten separate town assessing jurisdictions.
At the same time, determining the market value of commercial real estate has become increasingly complicated.
Inflation has increased insurance, utilities, repairs, maintenance, construction and labor costs. Higher borrowing costs and tighter lending standards have increased the cost and risk associated with financing commercial real estate. These factors can reduce net operating income, increase investment risk and ultimately place downward pressure on property values.
Capitalization rates can compound that pressure. For income-producing property, net operating income is divided by an appropriate capitalization rate to arrive at an indication of value. As capitalization rates increase, indicated values decrease, assuming income remains constant.
Capitalization rates are influenced by interest rates, financing availability, inflation expectations, alternative investment returns and property-specific risk. As those factors change, the capitalization rate appropriate for a property may change as well. These distinctions matter for property tax purposes.
A property may maintain its rental income while experiencing substantial increases in insurance, utilities, payroll and maintenance costs. Its net operating income may decline as a result. If that decline occurs while investors are also demanding a higher capitalization rate because of increased risk, the effect on value can be magnified. An assessment based upon historical income, expenses or capitalization rates may therefore substantially overstate current value and the resulting tax burden.
As we approach 2027, property owners should also pay close attention to another potential source of excessive taxation: the taxable status date.
An assessment must reflect the condition and status of the property as of the applicable taxable status date. This is particularly important for vacant or underutilized properties and properties undergoing redevelopment.
Future development should not be taxed as though it already exists. A parcel seeking approvals for development remains undeveloped on taxable status date if construction has not commenced. Similarly, a partially completed project should be valued based upon its actual condition and not as though the completed building already exists and is generating stabilized income.
The applicable date varies by jurisdiction. On Long Island, Nassau County’s taxable status date is January 2, while Suffolk County generally uses March 1.
Owners contemplating construction, demolition, redevelopment or significant changes in occupancy should document the property’s condition as of the applicable date. Photographs, construction records, rent rolls, vacancy information and other contemporaneous records can provide important evidence supporting the proper assessment.
Commercial property owners should review their assessments against the actual economics, condition and risk profile of their properties. Vacancy, concessions, arrears, rising operating expenses, insurance costs, capital expenditures, tenant rollover and capitalization rates can all affect value. So can the precise condition and status of a property on the taxable status date.
When these realities are not adequately reflected, the result may be an overstated assessment and an unnecessarily high property tax burden.
In today’s changing commercial real estate market, reviewing an assessment is not simply about challenging a number. It is about ensuring that the value being taxed reflects the property that actually exists, the income it can actually generate and the risks investors actually face. When the assessment fails to reflect those realities, there may be a meaningful opportunity to reduce both the assessment and the property taxes that follow.
Brad W. Cronin, Esq.
Brad W. Cronin is the founding Partner at Cronin & Cronin Law Firm. He has over 40 years of Legal Experience. Brad represents a cross section of many of the largest New York developers, property owners, national corporations, REITs and retail chains. He has extensive trial experience having successfully litigated and resolved high profile cases throughout New York State which has resulted in a number of landmark decisions in the field of Tax Certiorari.
Over the years Brad’s reputation for honesty and integrity has led to long term relationships with municipal assessment officials. His expertise and extensive experience along with his reputation has resulted in some of the highest property tax reductions in New York State.
Brad has been selected as a Who’s Who of Long Island Business News for the past 7 years in the fields of Tax Certiorari law and Real Estate Law. Each year Long Island Business News honors business leaders whose creative approach to challenges and positive results help to make Long Island better.
For over 30 years Brad has earned the highest rating awarded by Martindale Hubbell in both competency and ethics in his field. This is an honor bestowed on him by his peers for his professional excellence.
Brad is a columnist for the New York Real Estate Journal’s “Ask the Expert” quarterly feature discussing current real property tax issues. Some issues addressed are Hurricane Sandy’s effect on property taxes, Nassau County’s Disputed Assessment Fund, emerging market trends, New York’s property tax rates, and how your purchase price can affect your taxes.
Brad has been an invited speaker and participant on various panels involving different subjects affecting tax certiorari and valuation of property such as condominiums, environmental contamination, and reviewing changes in the tax certiorari field. As a member of the Nassau and Suffolk Condemnation and Tax Certiorari committees, he has worked to implement changes to facilitate the timely resolution of commercial tax protests.
Brad currently serves as executive member of the steering committee and served as Co-President of the Long Island Real Estate Group for three years. This organization has supported various Long Island charities, as well as real estate related projects, educational real estate programs and networking events. He is Cofounder of the North Shore University/Northwell Hospital Department of Medicine Leadership Circle Committee and serves on the Village of Plandome Planning Board.
Sean M. Cronin, Esq.
Sean M. Cronin is a founding partner at Cronin & Cronin Law Firm with over 20 years experience. He specializes in negotiating tax certiorari matters for prominent developers, national REITs and tenants in Nassau, Suffolk, and Westchester counties, as well as the five boroughs. He is responsible for successfully reducing the assessments, and thereby the real estate taxes, on many of the largest properties in New York State thanks to his expertise in property valuation issues and knowledge of market conditions and demographics. His clients include developers and owners of all property types, including office buildings, industrial buildings, shopping centers and retail locations, restaurants, apartment buildings and condominium complexes, golf courses and assisted living facilities.
Sean is an Executive Board member and past Co-President of the Long Island Real Estate Group, a charitable organization created to support local communities. He is an Executive Board Member of Vision Long Island which advances more livable, economically sustainable, and environmentally responsible growth on Long Island through Smart Growth. Sean is an Advisory Board Member of the Viscardi Center and on the Board of Advisors of the Energeia Partnership. Sean serves on the Board of Directors of The Real Estate Institute of Long Island, a resource for professional career development and a commitment to meeting the needs of entrants into the real estate community. He is an active member of the Chaminade Lawyer’s Association and Real Estate Group as well as the Washington & Lee Alumni Association.
Sean is featured regularly in the New York Real Estate Journal’s “Ask the Expert” section and has been quoted in various publications, including the Long Island Business News and Newsday. He has been recognized by the Long Island Business News as a “Who’s Who in Commercial Real Estate” multiple times, most recently in 2023 and by the Long Island Herald as the Top Tax Certiorari Attorney in 2023.
