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Assessor previews commercial assessment changes before BOE commercial hearings: multifamily rises, office falls sharply
Summary
County assessment staff told the Board of Equalization on June 9 that the total commercial tax base fell about 1.5% for 2026 with multifamily values up roughly 6.2% and office values down about 19%; staff outlined cap‑rate, rent, vacancy, and land‑rate guideline changes ahead of commercial hearings.
Derek DuBan, the county assessor (presenting the commercial briefing on June 9, 2026), told the Arlington County Board of Equalization that commercial assessments for 2026 reflect divergent market trends across property types: the total commercial tax base decreased roughly 1.5%, multifamily increased about 6.2%, and office values fell about 19%.
DuBan said staff base values on owner‑reported income and expense data, market sales, and industry publications such as PricewaterhouseCoopers and RERC and then derive capitalization rates that are applied to income streams. "All of our values are grounded in income and expense data reported directly by our property owners," he said.
Key guideline and market changes presented:
- Apartments/multifamily: rents increased across garden, mid‑rise and high‑rise types; vacancies and concessions for garden‑style apartments fell from 6% to 4%; cap rates for apartment types were lowered by 10 basis points; staff noted fewer recorded apartment sales in 2025 than 2024 but ongoing new construction and approved projects.
- Committed affordable units: average rents increased (largest gains in efficiencies/one‑bedrooms); vacancy/collection rates generally declined and expenses varied by cohort; capitalization rates were lowered by 10 basis points across apartment types.
- General commercial: rents generally rose 3–5% (commonly ~4%), retail vacancy rose 1%, self‑storage showed larger changes due to increased filing of income/expense statements, and approximately 400 properties are still valued using a cost approach (improvement cost increased roughly 1%).
- Office: staff reported a significant decline in office values (~19%), with vacancy averaging about 24%; they applied a 9% concession figure for office properties and increased office cap‑rate ranges (previously about 8.25–11% to 9–13.5%), driving much of the sector’s value decline.
- Hotels and adaptive reuse: hotels saw a modest decline (~3.8%) but Arlington led regional metrics for occupancy and average daily rate in recent years; staff noted limited 2025 hotel sales, one new Hilton opened in Rosslyn, and multiple adaptive‑reuse projects converting office to multifamily were approved.
- Land valuation guidance: apartment metro‑corridor land was set at $78,000/unit within a half‑mile of metro, $65,000/unit beyond that, 100% committed affordable at $60,000/unit regardless of metro proximity; office metro quarters at $60/sf and non‑metro at $50/sf; hotels at $50,000/key.
Presenters said they will distribute the new written guidelines and slides that day. Board members asked about how tenant improvements (TIs), specification suites, and excess vacancy are treated; staff said TI costs are often reflected in rent and excess‑vacancy adjustments are considered case‑by‑case below the line, while the updated concession and cap‑rate guidance is based on the county’s I&E analysis and third‑party publications.
The briefing concludes with staff opening the floor to questions; the board will begin commercial BOE hearings in person on June 10 at 9:00 a.m.
