The assessed valuation of nearly all office properties in Des Moines’ central business district remained unchanged in the 2023 reevaluation, a sharp contrast to the double-digit percentage increases experienced by most other commercial property in Polk County, an official said.

“We felt like the conservative thing for us to do is hold [the valuation of downtown office properties] where they are at for now until we have better evidence that they are going up like other properties or that they may be going down, which is what some people are speculating,” said Bryon Tack, Polk County’s deputy assessor.

On March 31, Iowa assessors’ offices mailed 2023 assessments to all property owners. County assessors reappraise properties in odd-numbered years.

In Polk County, over 186,000 assessment notices were mailed. The assessed valuation of properties totaled over $66.2 billion, a 24% increase from 2022’s valuation of over $53.3 billion.

In Dallas County, nearly 60,000 notices were mailed. The assessed valuation of Dallas County properties totaled over $19.6 billion, a 23% increase from 2022’s valuation of over $16 billion.

Property values are part of the formula used to determine owners’ property tax bills. In Iowa, 90% of a commercial property’s value can be taxed after application of the state’s business property tax credit. With the growth in valuations, many commercial property owners will likely see larger property tax bills, county officials have said.

A deeper dive into Polk County’s valuations
County officials have warned since late 2022 that the valuation of most properties would increase. Over the past couple of years, the sale price of a majority of properties has exceeded the properties’ assessed valuation.

In Polk County, most commercial properties saw their valuations jump 18.9%, Tack said. The exception was downtown office properties and movie theaters, both of which had no changes in valuations, he said.

In the fourth quarter of 2022, 17.9%, or 1.16 million square feet, of the central business district’s more than 6.5 million square feet of office space was vacant, according to a CBRE market report. In 2019’s first quarter, 7.6%, or 477,573 square feet, of downtown’s office space was vacant, CBRE data showed.

The vacancies, coupled with the few office properties sold in 2022, made it difficult to accurately determine valuations, Tack said. Rather than decrease the valuations of the office properties, assessor officials decided not to make changes, he said.

“It’s typically not our first choice,” Tack said. “It was based more on the anecdotal evidence that was out there because we really didn’t have enough sales to show us that there was a change downtown either up or down.”

The same decision was made about movie theater properties, he said.

In 2021, the valuations of hotel properties in Polk County were decreased an average of 30% because of the pandemic-induced reduction in occupancy rates. Hotel property values were increased in 2023 but not to pre-pandemic levels, Tack said.

“Occupancy levels are up and their average daily rates are up,” Tack said.

Multifamily properties saw their property values increase an average of 23%, mostly because of the large number of sales at prices above assessed valued. For instance, in January 2022, the 240-unit Wellington Apartment complex at 4700 E.P. True Parkway in West Des Moines sold for $44.8 million. The property’s value at the time was $19.2 million. It’s now $23.6 million, a 23% increase.

Most of the county’s industrial properties also experienced average increases in assessed values of 19.5%.

Tack said he expects a record number of protests to be filed, most of which will likely be from homeowners who saw their properties’ values increase an average of 21.9%. The area’s strong residential real estate market, coupled with low interest rates for home mortgages for part of 2022, fueled the increase in valuations.

In 2017, a record 7,893 protests were filed, according to the assessor’s annual report. Tack said the number could hit 10,000 this year.

Dallas County’s valuations
Residential property owners in Dallas County saw the values of their properties increase an average of 14%, said Steve Helm, the county’s assessor. The value of commercial property increased an average of 16%, he said.

Most of Dallas County’s hotel properties are at or above their 2019 values, Helm said. For instance, the Hyatt Place West Des Moines/Jordan Creek hotel property at 295 S. 64th St. was valued at $11.39 million in 2023, a 24% increase from 2019’s value of $9.3 million, a review showed. The Sleep Inn-Waukee property at 2885 Grand Prairie Parkway was valued at $6.5 million, a 41% increase from 2021.

“The hotels and motels are not big fans of mine,” Helm said.

Want to file a protest?
Protests can be filed through April 30. For information on how to file a protest in Polk County, click here. For information on how to file a protest in Dallas County, click here.