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Board cuts office-tower assessment after members accept larger lease-concessions figure
Summary
The Board reduced the assessed value of a downtown office tower to $17,876,149 after members accepted an increased annualized concession figure ($1.5M) tied to a new long-term lease with Rand Corporation; the county had used a lower concessions input in its test sheet.
The Arlington County Board of Equalization voted to lower the assessed value of an office tower at 1200 South Hay Street to $17,876,149 after hearing testimony that the landlord granted substantial concessions to secure a long-term lease renewal.
Appellant counsel Ms. Truske and Tom Colucci told the board the property suffers from persistent vacancy (about 24.7% since 2019) and that the landlord granted roughly $31,000,000 in total concessions to renew the lease with Rand Corporation. Truske said that annualized over the 16.5-year term the concessions amounted to about "$1,900,000" and that the county id not fully capture that impact when it plugged a smaller concessions number into the test sheet.
Colucci said the owner—alculated an annualized cash-concession figure of $1.5 million (the cash inducement portion) and that using that number in the appellant's recalculation yielded a property value near $17.8 million. County presenter Rob Peralta said staff added a 9% concessions allowance in its revised worksheet and presented net-rent and vacancy adjustments that led to a higher county valuation; he said staff had reviewed the renewal lease and related materials in the county office because of confidentiality covenants.
Board members debated whether a county-wide blanket 9% concessions factor was appropriate and discussed how to treat vacant floors and tenant-improvement costs. Several members said a blended approach that raised concessions toward the appellant's figure produced values in the $17.08M nd $17.88M range. One member moved to adopt a final value of $17,876,149 reflecting increased concessions (the board escribed the adjustment as a $1.5M annualized concession input); the motion passed unanimously.
The board recorded the reduced assessed value and closed the case. Members and staff then discussed procedural steps about recordkeeping and the public posting of any confidential lease material shown during the presentation.
