Tag: Chicago Commercial Property Taxes

Cook County’s 2024 reassessment cycle brought major changes that will shape Class 3 tax planning for 2025, especially after the 34 percent rise in assessments. Class 3 multifamily buildings saw a 34% increase in assessed value, the largest rise among major property types. Many owners expected some level of appreciation, but the scale of these increases and the assumptions behind them are now shaping how investors and advisors’ approach 2025 tax planning. 

Where the Increases Hit the Hardest 

Several areas saw far stronger assessment pressure than others.
In the West Loop and Logan Square, assessments rose between 39 and 41 percent. These neighborhoods experienced a surge in rent after the pandemic. While income increased, some assessment models appear to have relied on cap rates that do not reflect actual market stability.
Bronzeville saw a 33 percent jump. New developments in the area created higher comparable values that influenced the assessments of older multifamily buildings, even when those buildings did not share the same finishes, amenities, or program incentives.
Across the Northwest Side, many assessments appear to be based on full occupancy and consistent market rent even when the rent rolls show a very different picture. Concessions, turnover, lease-up periods and renovation-related downtime all affect NOI, yet they were not always accounted for. 

These discrepancies matter because they shape the foundation of your 2025 tax planning. If the assumptions are flawed, the tax burden will be too. 

When the Assessment Does Not Reflect the Property’s Actual Performance 

Several tax attorneys report running into a familiar challenge at the Board of Review. Even when rent rolls show concessions or vacancies, the valuation model may still be built on stabilized income. In some cases, the assessment reflects an ideal version of the property rather than its real operating performance. 

This issue is not unique to Cook County. National research, including work from the Lincoln Institute of Land Policy, has called attention to how optimistic income assumptions can inflate multifamily property values. This makes accurate documentation essential during appeals. 

What Has Worked in Appeals This Year 

Many owners have seen better results when their appeals include valuation models tied directly to the building’s performance. This often starts with market adjusted NOI, block-level rent analysis, occupancy trends, and expense data that reflect the condition and age of the property. 

Once these real figures replace the assessor’s original assumptions, the valuation often shifts toward a more accurate reflection of the property’s current financial picture. This approach has been especially important for buildings where turnover, concessions, or renovation schedules create inconsistent income. 

Affordable Housing and the Importance of Early Planning 

Owners of Class 9 and LIHTC properties saw more successful outcomes when they planned both incentive strategy and appeal strategy together. When these processes are handled separately, key information may not be included, and opportunities for appraisal adjustments may be missed. 

For 2025 planning, aligning these strategies early helps avoid unnecessary risk. 

What Commercial Real Estate Owners Can Prepare for 2025 

Now is the time to review how each building has been valued and whether those assumptions match reality.
Owners should check whether the assessor’s income, occupancy and cap rate assumptions line up with the rent rolls.
Document anything that affects actual NOI, including turnover, concessions, vacancy, seasonal leasing patterns and any downtime caused by renovations.
If the property participates in a tax incentive program, review whether an integrated appeal and incentive plan would help protect the property from overvaluation.
Finally, compare your building’s performance to surrounding properties to identify where submarket trends support an appraisal adjustment. 

A 34% increase is a concern, but the bigger issue is whether your valuation reflects your building or a hypothetical version of it. Correcting these assumptions now can protect operating cash flow and support smarter tax planning for 2025. 

Every multifamily asset has its own income story, and effective Class 3 tax planning should reflect that reality. If you want support reviewing how the new assessments affect your properties or need guidance building a stronger strategy for 2025, we can help.

Contact us and let our team support your commercial real estate tax planning for the year ahead.