At least ninety percent of commercial property owners are paying too much federal income tax because they fail to take the tax deductions that are available on real estate, according to a study by O'Conner & Associates of Houston, TX. In analyses of property depreciation during the past four years, consultants found that at least nine out of ten owners of commercial real estate were improperly reporting depreciation on federal income tax returns. As a result they paid too much in tax dollars. Time to talk to your CPA.
A recent KPMG, LLP study ranked the least expensife US cities, with population over 1.5 million, accounting for labor costs and state tax incentives.
The least expensive list included (in order): Atlanta, Tampa, FL, Indianapolis, IN, Milwaukee, WI and Northern Virginia (Metro D.C.), Portland, OR and Chicago.
The most expensive list was headed by New York and San Jose, CA.
A study released in February by MIT's Center for Real Estate reports that investors in commercial real estate earned 34% on their dollars last year. This performance by investment real estate beat stocks and both government and corporate bonds. Leading indicators for commecial real estate in the US point to an increase in activity in the next six to nine months.
A total of $268 billion of investment grade commercial real estate sold in 2005 (properties valued over $5MM). This was a 44% increase over 2004. Here are the numbers for the major property sectors.
Office: $99.7 billion up 34%;
Multifamily: $87 billion up 72% ;
Industrial: $34.5 billion up 65% ;
Retail: $46.4 billion up 16%; -
2006 early numbers indicate another record year with ample capital available for growth in each market.
Look at these 2001 vs. 2005 comparison average CAP rates:
Industrial: 3rd Qtr. 2001 = 9.5% vs. 3rd Qtr. 2005 = 7.4%
Multi-Family: 3rd Qtr. 2001 - 9.0% vs. 3rd Qtr. 2005 = 6.0%
Office: 3rd Qtr. 2001 = 9.6% vs. 3rd Qtr. 2005 = 7.1%
Retail: 3rd Qtr. 2001 = 9.5% vs. 3rd Qtr. 2005 = 7.5%
Anybody see a trend here? Note: From a Real Capital Analytics Survey.
ale