New York City has over $1 trillion in property value, making it the most expensive city in the United States. While much of the national attention is on the mayor’s second home or pied-à-terre, the burden placed on commercial property and businesses has never been higher. While a general 10% property tax increase was averted earlier in the year, businesses can still expect to see record levies in 2027 and beyond, especially as the demand for funding surges.
NYC has long been known for its beautiful and massive office buildings; however, these are feeling the sting of changing economic conditions, with record vacancies across the five boroughs. Despite this precipitous drop in tenants, property assessments and taxes have not fallen accordingly. In this article, we will cover why office demand is falling and why owners are still paying full price.
Commercial Property Funds New York City
While the debate over affordability rages, and residential homes are catching the spotlight, it is businesses that fund the vast majority of the city. Over 80% of all property tax revenue comes from businesses, especially Class 2 real estate, which covers apartments and condos. While apartments account for the largest chunk of commercial value in the city, offices remain an outsized portion of both real estate and the economy, and their health often reflects the economic health of the city as a whole.
New York City Office Buildings Are a World Apart
Despite being confined to a relatively small area, New York City encompasses over 8.5% of all office space in the United States. This makes office buildings of all types integral to the economy, as well as the skyline. NYC has far more office jobs than any city in the nation, and a significant percentage of New Yorkers earn their living in an office environment. This demand has led to a boom in construction that has lasted decades. New York boasts both historic buildings and those that are fresh off the architect’s table. Even having a branch office somewhere in New York City proper is a badge of honor for any company. However, the constant growth finally stagnated thanks to several economic realities.
The Pandemic
While office construction, occupancy, and revenue skyrocketed for decades, the pandemic threw a devastating right hook to the entire industry almost overnight. With government mandates put in place, many businesses chose to allow their workers to begin operating remotely. Occupancy and growth slowed to a crawl, as a new reality hit the market. Once this work style was established, many companies and employees found it hard to reverse course once the pandemic passed.
Offices in Limbo
In 2026 and beyond, the pandemic may be gone, but the residual effects remain. Many businesses grew larger during the pandemic thanks to a hiring boom, and simply have outgrown their office space in the meantime. This makes returning to the office impossible or at least incredibly difficult. However, thanks to return-to-office mandates catching fire in certain industries, the demand for office space has also started to climb again. The last few years have seen a small boom in the demand for space, and this should continue as companies change tack once again. This purgatory has had a large impact on the values that are assessed on offices, which can lead to large tax bills in New York City.
The Value of New York City Offices Compared to Assessment
While businesses have wavered on the debate between return-to-work mandates and keeping the remote structure, the assessed value of offices has largely remained steady, with many values hanging around their pre-pandemic peaks. Since commercial properties are assessed based on their potential ability to generate income, many offices are being assessed on how much money they could be making at capacity, rather than what they are actually earning. Assessors, especially overworked employees in New York City, may not be aware of these changes, or may only give them a passing glance.
Appeals Can Reveal the True Value of NYC Offices
The only way to get a second look from an assessor is to file a property tax appeal. Known as a grievance in the rest of New York, appeals are challenges directly against the assessor’s values. Since one of the main valuation approaches is based on income, this can be especially effective for offices that are dealing with falling demand or vacancies. By demonstrating your actual financial condition and the vacancy rate of your office building, you can show the assessor just how much you should pay in taxes.
While appeals cannot lower your tax rate, they can drastically decrease your property tax bill by reducing the assessed value of an office. Thanks to New York City’s esoteric assessment strategy and the web of valuations used, appeals are often used to gain clarity on why an office or other commercial property is being taxed as it is. A good appeal based on income not only uses an accurate Real Property and Income Expense Statement (RPIE), but also ensures that non-taxable items are left out, such as intangible property.
The NYC Appeal Deadline Has Passed, But Businesses Can File Certiorari Litigation
While commercial properties had a deadline of March 1, 2026, to file property tax appeals, there are still options to explore. If you filed an appeal with the New York Tax Commission, but did not accept an offered property tax reduction, you will have to pursue a type of litigation known as an Article 7 Certiorari Writ. This is filed with the New York State Supreme Court. Since this is formal litigation, it requires expert witnesses, attorneys, extensive evidence, and additional resources. The writ must be filed within 30 days after the final assessment roll is filed, making the deadline late October.
O’Connor Offers Premium Support for New York City Businesses
98% of simple commercial appeals use professional representation in New York City. It takes an experienced firm to navigate the labyrinthine NYC property tax laws and appeal conventions, and it requires even more skill to land a substantial reduction. We at O’Connor are here to help, and have been helping companies across the nation deal with property tax issues for over 50 years.
We offer a full-service approach. When you enroll with us, we will use data-driven techniques to study your assessment, spotting any issues that require a protest. We then use our proprietary databases to study your property and other comparable ones, finding the perfect evidence to tell the story of your property. We will then spearhead your appeal, giving you an expert team to fight by your side. While the appeal window has closed, we can still coordinate a lawsuit with the New York Supreme Court. If you enroll with us now, we can be prepared for the appeal season in 2027, and we will appeal for you every year after that. There is no cost to enroll, and you will only pay a percentage of your savings if we can lower your taxes.
