NAIOP Poll Finds Over Half of Commercial Property Owners Face Assessment Hikes Above 10%

A new poll released by the New Mexico chapter of NAIOP, the Commercial Real Estate Development Association, reveals a significant financial pressure point for businesses, finding that more than half of its members owning property in Bernalillo County have seen their property tax assessments increase by over 10% this year. The findings are sparking concerns among developers and business owners about the unpredictability of operating costs and the potential impact on economic growth in the Albuquerque metropolitan area.

While the poll focused on a specific New Mexico county, the trend of sharp and often volatile increases in property assessments reflects a challenge facing commercial property owners across the United States. In Falls Church, Virginia, for instance, a city-wide analysis for the upcoming fiscal year 2027 budget showed similar variability. According to the analysis, one-third of all detached single-family homes saw assessment increases of more than 10%. The commercial sector there saw a mixed but still uncertain picture, with 53% of commercial properties experiencing no change or even a decrease, while others faced significant hikes. This patchwork of outcomes highlights the difficulty for businesses in forecasting one of their largest fixed costs.

The primary drivers behind these assessment spikes are often tied to robust real estate sales in prior years. Local governments use recent sale prices as a benchmark to re-evaluate the worth of all properties in a jurisdiction. According to budget documents from Falls Church, higher sales values were a key factor, compounded by the fact that assessed values in the previous year had not grown as significantly as market conditions might have warranted. This "catch-up" effect can lead to sudden, double-digit percentage increases that are difficult for businesses to absorb, particularly for small and mid-sized companies with tighter operating margins.

For the developers, building owners, managers, and investors that constitute NAIOP's membership—and for the thousands of businesses that lease space from them—these tax hikes have direct operational consequences. A sudden rise in property taxes, which are typically passed through to tenants in commercial leases, can strain budgets, reduce profitability, and divert capital that could otherwise be used for hiring, inventory, or expansion. The unpredictability itself is a major challenge, making it difficult to create accurate long-term financial plans and secure financing for new projects.

A complicated economic picture is emerging from these localized cost pressures against a backdrop of cautiously improving sentiment in the broader commercial real estate industry. A national NAIOP CRE Sentiment Index released in October 2025 showed a notable increase in optimism, with the index rising to 56, a score indicating expectations of improving market conditions over the next 12 months. Marc Selvitelli, president and CEO of NAIOP, noted at the time that the industry was "poised for growth" due to improving capital markets and stabilizing vacancy rates. However, the on-the-ground reality of soaring tax bills complicates this optimistic outlook, creating a tension between positive macroeconomic signals and challenging local operating conditions.

In response to rising fixed costs like property taxes, property owners are increasingly focusing on managing variable expenses. A 2025 Siemens Infrastructure Transition Monitor survey, cited in a NAIOP publication, found that 57% of commercial real estate executives plan to increase investment in energy efficiency for their buildings, making it their top infrastructure priority. More than half also intended to boost spending on smart building technologies and building electrification. These investments are seen as a way to offset uncontrollable cost increases by reducing utility and maintenance expenses over the long term, thereby preserving the financial viability of their properties.

These unpredictable assessment hikes create significant budgeting challenges for property owners and the businesses that lease from them. In our experience, many business owners treat property tax bills as fixed and non-negotiable, but that's often not the case. Assessments are based on valuations that can and should be scrutinized. We believe a proactive approach is essential. Waiting for the final tax bill to arrive is too late. Business owners should be carefully reviewing their assessment notices as soon as they are issued, comparing their property's valuation to similar properties in the area, and understanding the local appeals process. This is a core part of our tax preparation and compliance services, where we help clients analyze their property valuations and determine if an appeal is warranted. Navigating the appeals process can be complex, but successfully challenging an over-assessment can yield substantial savings for years to come. Business owners facing these increases should consult with an advisor to explore their options by contacting C&S Finance Group LLC at csfinancegroup.com.

Looking ahead, commercial property owners and their business tenants will be closely monitoring municipal assessment cycles and budget deliberations. The key dynamic to watch is whether local governments will adjust their millage rates downward to offset the surge in assessed values, or if they will allow the higher valuations to translate directly into larger tax burdens. The predictability of these future costs will likely be a critical factor in decisions regarding new development, acquisitions, and long-term leasing commitments in markets across the country.