Commercial real estate deal makers in North Texas were apparently on a mission to make fools out of Texas legislators and their over-hyped Property Tax Transparency Act of 2019. Turns out there was an even bigger property tax fiasco than the KPMG Tower sale on which I previously reported.
A piece in the Dallas Morning news is celebrating the 2019 sale of 777 Hidden Ridge in Irving Texas. This is the shiny new office campus for Pioneer Natural Resources in Las Colinas. The campus has over a million square feet and sits on roughly 34 acres.
According to the Dallas Morning News and Yardi Systems, the sale of the campus at 777 Hidden Ridge for $584,200,000 put the transaction at number 16 on the list of the priciest office deals in the U.S. for 2019. The campus was reportedly purchased by a partnership including PRP Real Estate Investment Management.
That $584 million price tag is notable for a number of reasons. For the 2019 property tax year the Dallas Central Appraisal District initially “appraised” the Pioneer Natural Resources campus at $231 million. The estimated property tax bill on that valuation would have been about $6 million. The CAD’s market valuation was subsequently reduced to $195 million for the 2019 tax year, so it’s safe to assume a protest was filed last year.
And then we get the news of this $584 million deal for the property at 777 Hidden Ridge…almost 3 times higher than the Dallas Central Appraisal District’s 2019 final market value.
Imagine being able to sell your Dallas-Fort Worth home for 3 times as much as the local CAD assessment. Of course North Texas homeowners know that’s not going to happen. Texas appraisal districts generally get close to market value on those annual assessments. As we can plainly see, the same is not true for trophy commercial property in Texas.
In Texas’ two-tiered property tax system where big commercial property owners play by a different set of rules, rules that often don’t include actual market value, making a mockery of the property tax system is the normal course of business.