At the Cook County Assessor’s Office (CCAO), our role includes reviewing and valuing commercial properties. Commercial properties include:
- Industrial properties such as warehouses and factories
- Retail properties such as stores and restaurants
- Residential properties with seven or more units
In Cook County, we review 1/3 of properties each year and determine their current value. We rotate between properties in the City of Chicago, north suburbs, and south and west suburbs.
Commercial properties are assessed using mass appraisal methodologies and standards. The CCAO uses the income approach to reassess most commercial properties. The Income Approach Valuation method is explained step by step below.
First, We Research the Property’s Value
First, we review some important information to help us calculate a property’s market value, or how much the property could sell for today.
Potential Gross Income (PGI)
- What is it: How much a property owner would earn annually if all units were occupied and leased at the current market rents.
- Where we get this information: Market data from third-party sources and past appeal information for similar properties.
Vacancy and Collection Loss (V&C)
- What is it: An estimate of typical unearned rent for similar properties.
- Where we get this information: This information comes from market data, third-party sources and past appeal information for similar properties.
Effective Gross Income (EGI)
- What is it: The estimated income a property would produce using market data.
- How it is calculated: Subtracting the Vacancy and Collection Loss rate from the Potential Gross Income
Net Operating Income (NOI)
- What is it: Income to run a business property after typical expenses such as:
- Property taxes
- Insurance
- Repair and maintenance costs
- Property management fees
- Professional services fees (legal, marketing)
- How it is calculated: Subtracting Operating Expenses from the Effective Gross Income.
- Where we get this information: This information comes from market data, third-party sources and past appeal information for similar properties.
- Note: Expenses not typically included in operating expenses:
- Depreciation
- Debt costs
- Mortgage costs
- Capital expenses
- Owner’s equity / payments to owners
- Broker commissions (unless amortized over the life of the lease)
- Tenant improvement allowances (unless amortized over the life of the lease)
*Amortization is the process of spreading out the cost of an asset or debt over a specific period.
Capitalization Rate (Cap Rate)
- What is it: A real estate metric (%) used to estimate the potential earnings on an investment property. The Assessor's Office only uses an unloaded cap rate. This means the real estate taxes are included in the operating costs.
- How it is calculated: It's calculated by dividing the property's net operating income (NOI) by its market value or purchase price and is expressed as a percentage.
- Where we get this information: This information comes from market data, third-party sources and past appeal information for similar properties.
- Examples:
- A property with $100,000 of net income divided by a 9.5% cap rate has an estimated market value of $1,052,631.
- A property with $100,000 of net income divided by a 6.5% cap rate has an estimated market value of $1,538,461.
Additional Land
If a property has an above normal land to building ratio, the CCAO addresses this by adding in the additional land value (additional square footage x land price per SF).
Example of Income Approach Calculation:
| Income Approach | ||
| Potential Gross Income | $1,000,000 | |
| Vacancy and Collection Loss | $100,000 | 10% |
| Effective Gross Income | $900,00 | |
| Op Expenses (excluding RE tax) | $180,000 | 20% |
| Real Estate Tax Expense | $282,870 | 31.43% |
| Total Operating Expenses | $462,870 | 51.43% |
| Net Operating Income | $437,130 | |
| Capitalization Rate | 8.50% | |
| Market Value | $5,142,706 | |
| Additional Land Value | $10,000 | |
| Market Value with Additional Land | $5,152,706 | |
Next, We Apply the Level of Assessment
Next, once we know the current market value, a level of assessment is applied. This is the percentage of the market value that will be taxed depending on the type of building. These levels of assessment are set by Cook County ordinance.
Commercial properties like office, industrial, and retail buildings typically have a 25% level of assessment. Multifamily properties like apartment buildings where people live have a 10% level of assessment. Here’s an example:
| Commercial Building | Multifamily Apartment Building | |
| Market Value | $1,000,000 | $1,000,000 |
| Assessment Level | 25% | 10% |
| Assessed Value for Determining Property Taxes | $250,000 | $100,000 |
Additional Savings: Commercial properties may be eligible for temporary incentives that could lower assessment levels. These incentives are intended to stimulate the local economy and vary by township. To learn more about incentives and affordable housing programs, review the buttons on the left hand column of this page.
Lastly, we share the new reassessed value
Lastly, if a commercial property you own is reassessed, we will send you a Reassessment Notice that informs you of the new estimated Fair Market Value.
You can review how your property was valued by accessing our detailed methodology reports. Click on the township your property is in and then open the file to locate your PIN to see exactly how your property was reassessed.
FIND YOUR PROPERTY
Frequently Asked Questions
- Where does our office get property data?
We use a number of professional market data providers such as CoStar, Trepp, CBRE, Cushman and Wakefield, JLL, and other companies to research the current real estate market. We also review past appeals and interview local brokers, appraisers, and market participants for insights.- What if I own multiple properties?
If any or all of your commercial properties are reassessed, you will get a reassessment notice for each Property Index Number (PIN). If your properties are in different parts of the county, they may be reassessed in different years.- What if I own a property that has multiple PINs?
If your property has multiple PINs attached to it, you will get a reassessment notice for each PIN.- What if I own an affordable housing unit?
Visit the Affordable Housing Programs website page to learn more about programs available.- What programs do you have to encourage economic development?
Property owners may be eligible for a reduced assessment for some multifamily, commercial, and industrial properties. Learn more on the Incentives and Special Properties page.- What if I think there was an error in determining the value of my commercial property?
You have the right to appeal your reassessment value, and we encourage you to file an appeal if you think there is an issue. These are some common reasons why property owners file appeals:- Your property was vacant longer than typical because of an unexpected event like flooding or fire
- Your property had tenants that didn’t pay rent for a period of time
- Your property was under construction and has yet to be leased
Download helpful resources:
Download this brochure to learn about filing an appeal for a commercial property. Download this flyer that explains the property tax system and resources available to business owners.
Download this flyer that explains the property tax system and resources available to business owners.