Minnesota Tax Court Lowers Minneapolis Office Property Value

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The Minnesota Tax Court has lowered the estimated market value of a Class A office building in Minneapolis with 871,232 square feet of net rentable area. After considering competing appraisals, the court gave 80% weight to the county's appraisal of $117 million, which correctly classified the property and accounted for unstable office market conditions.

Why it matters

This ruling highlights the ongoing challenges facing commercial real estate valuations, especially for office properties, as the pandemic has significantly impacted occupancy and rental rates in many urban markets. The court's decision to rely more heavily on the county's appraisal methodology reflects the need for thorough analysis of market conditions when assessing property values for tax purposes.

The details

The subject property is a Class A office building constructed in 2001, with portions of the building having undergone renovations. The taxpayer's expert valued the property at $72 million, while the county's expert valued it at $117 million. The court gave greater weight (80%) to the county's appraisal, which correctly classified the property as Class A and used a discounted cash flow analysis to account for the unstable office market conditions.

• The Minnesota Tax Court ruling was issued on March 10, 2026.