Expected Assessed Value Changes In 2024

In November, BC Assessment provided a summary of assessment changes that they were planning to institute for the 2024 roll values in comparison to the 2023 roll values for ICI properties. We have paraphrased BCA’s comments. Our comments are in italics, taken from agents’ market report.

In summary:

  • Assessed values have increased in most sectors and areas in Greater Vancouver
  • Agents’ market reports suggest that the market, even industrial, has slowed since 2022
  • 2024 assessed values should be looked at carefully. Significant increases should be reviewed. Current market sales will need to be compared to your property to see if BCA were low in the past and are just doing catch up or whether an appeal is necessary.

Property assessments are as of July 1st, 2023, so our commentary will focus on what occurred from second half of 2022 to first half of 2023.

Multifamily Land & Properties Under Construction

BCA did not provide any indication of how values of development sites had changed.

AREC: With the increase in interest rates and construction costs, land values began to fall from their March 2022 peak. Some decrease may have been captured in the 2023 assessment; however, we have seen drops of some 30% in places. Assessed land values should have fallen.

Industrial

The rental rates show an increasing trend with a stable or increasing cap rate, resulting in value increases.

Land value increased in all areas with the exception of Vancouver which shows a 15% decrease for certain properties. In general, value increases from 10% to 35% can be expected in all areas. Locations towards the east show a greater increase in percentage with Langley and Surrey showing an increase close to 35%.

AREC: BCA rental rates were below market but so were their cap rates in 2023. Agents report a significant slow down in rental increases from July 2022 to July 2023 showing around a 5% increase. Asking prices dropped 5-15% from March to July 2023. Hence there could be catch up but those percentage increases by BCA seem too much.

Retail

Assessments show stable values for Big Box or increasing values for neighborhood shopping centers. Community & regional shopping centers show a stable or decreasing trend. Retail cap rates have increased from 2022 to 2023. For street front retail, BCA saw an increase in rents and stable cap rates, showing a general increase.

AREC: The rental rates have held fairly steady and cap rates likely increased. Assessments are likely reasonable.

Office

BCA concluded stable or decreasing rental rates in the Vancouver core with the general trend of office value perceived to be decreasing. To the contrary, the rental rates in suburban areas are on an uptrend with a stable vacancy and increasing cap rates. Assessments show some decreases but mostly moderate increases in the office values.

AREC: Low confidence in office products continued. The investment volume dropped by 76% in first half of 2023 compared to same period of 2022. The low demand resulted in an increased vacancy and cap rates. Agents report that rental rates were consistent from July 2022 to 2023, so one might anticipate a fall in values.

Commercial & Mixed Use Development Land

The adjustments in values are varied among different municipalities. In general, BCA say there is an increase in values except for Vancouver, Burnaby, Tri-cities/NW, North Shore. These areas potentially may see a value decrease from 5% to 15%. However, in areas towards the east of Lower Mainland, the increase can go up to 35% to 40% such as in Langley, Pitt Meadows/Maple Ridge, Mission, Abbotsford, and Chilliwack. Stable or increasing rental rates with stable cap rates have led to an uptrend in value in those areas.

AREC: Given the increases in interest rates and construction costs, such increase in outlying areas seems high, unless BCA are doing “catch up”.

Multifamily

Multifamily remains in demand with increasing rental rates and stable or increasing cap rates. The trend is mixed dependent upon the location of the properties. The value is expected to be relatively stable.

AREC: Given the rent increases, we might have expected a larger increase in values. Over 50% of multi-family deals were conducted outside of Vancouver as investors look for higher yields in suburbs. The assessment value may see a higher increment in suburbs than in downtown areas.

Observations

Some points to note.

  • BCA has stated “The percentage increase over last year is not relevant as BCA could have been too low last year. The appeal panels review “actual value” at the date of valuation.”
  • Buildings under construction may be over-assessed. The question is whether BCA have allowed high enough costings in their valuations, reduced condo values and allowed for interest rate increases.
  • Land values could be high.
  • Whenever BC Assessment increases or decreases the values, the question is whether the change is correct.
  • Even if the % increase seems fine, the original value may have been high.
  • If you have never had a tax review on a property, it is recommended, as it establishes a base for reviewing assessment in future years.
  • The answer to many of these questions is to relate sales to a subject property. We will do this in our review process.

Call us at (604) 733 3232 if you require further elaboration or require assistance interpreting your assessments.