![]() ![]() The pandemic accelerated a move to remote work and a migration of college-educated workers away from expensive coastal cities to more affordable cities in the South and Southwest. “Some cities with high concentrations of commercial property aren’t heavily reliant on property taxes for revenue, leaving them more insulated from swings in commercial real estate assessed value.” ![]() “There’s significant variation in the potential credit impacts of the commercial property downturn,” Moody’s said in the October report. By contrast, in Phoenix, commercial property accounts for about a quarter of assessed value, but real estate taxes make up just 9% of city revenue. In Atlanta, commercial property makes up 48% of assessed value and property taxes comprise almost 40% of city revenue. (Bloomberg) - Remote work and rising interest rates have battered office values, a potential worry for city officials and the investors who count on property-tax revenue to help repay some of the municipal debt they buy.īut a Moody’s Investors Service analysis shows the impact of the upheaval in the commercial real estate market will vary from city to city depending on two key variables: the percentage of cities’ tax dollars derived from property taxes and the share of the tax base made up by commercial property.īy these metrics, Atlanta and Boston’s budgets are most sensitive to a decline in office, retail and hotel values among the 14 cities analyzed, while Phoenix and Philadelphia are best positioned. ![]()
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