In a city full of ultra-expensive properties, the most valuable of them all is the Empire State Building observatory. The 86th-floor tourist attraction is worth more than $20,000 per square foot, or double the amount paid for sky-high apartments on Billionaires Row. Beneath the observatory, the landmarked tower’s office suites are 94% leased..
Tax assessors have taken note.
They determined the Empire State Building’s market value jumped by 10% in the past year, according to data released yesterday by the city Department of Finance. Thanks to its higher value, the city proposes to raise the tower’s annual property tax bill by 3%, to $50 million. The increase isn’t a done deal because owner Tony Malkin could dispute his building’s new assessment. A spokesman had no immediate comment.
Boom times at the landmarked tower symbolizing New York are part of a broader recovery in Manhattan office buildings, one that may go some way to putting to rest lingering fears of a “doom loop” that would wreck the city financially.
Average market values for office properties rose by 2.7% last year, and assessed values rose by 2%, according to tentative data released by the Finance Department. That’s welcome news because property taxes are the city’s biggest source of revenue, and commercial buildings account for 40% of that, according to the Independent Budget Office.
Not all office towers are sharing in the good times, of course. The Chrysler Building’s estimated market value fell by 5% last year, a consequence of elevated vacancies and litigation between landlord Cooper Union and tower operator RFR Holding. CBS last year finished moving out of its longtime home at 51 W. 52nd St., and the building, known as Black Rock, saw a 3% decline in its market and assessed value. A spokesman said the building is 80% occupied, and owner Harbor Group has completely renewed the tower since acquiring it in 2021 for $760 million.
But, broadly, the Finance Department’s data shows the Manhattan towers are thriving as workers regain the office-going habit. Another building to see a 10% jump in estimated market value was St. John’s Terminal at 550 Washington St., which last year became a home for Google. The MetLife Building’s value rose by 5% after a new tenant filled much of the tower’s vacant space.
Valuations for tax purposes are reached using a complex formula based on a property’s net operating income and tend to adjust slowly, often no more than a percentage point per year. This means assessed values are often much lower than market values. The benefit of that is when market conditions turn hostile, property tax collections hold steady.
In a report last year, city Comptroller Brad Lander emphasized this system protects New York from the “doom loop” scenario in which falling property tax revenues destroys quality of life in the city and drives out residents.
Eddie Small contributed to this article.
