The Connecticut Tax Court recently addressed a property tax dispute concerning the fair market value of a 124,625 square foot medical office building in Danbury, Connecticut as of October 1, 2022.
Key Findings: Market Rent and Vacancy Rate
Market Rent: Danbury’s appraiser relied on actual lease rates at the property ($31.58 psf), while the property owner’s appraiser used a market rent based on comparable properties ($27.00 psf). The court found the owner’s appraiser’s market rent analysis more persuasive, noting that comparable properties supported a range of $24 to $28 psf.
Vacancy and Collection Loss: The owner’s appraiser used a 10% rate, but the court found a 5% rate more appropriate given the property’s long history of full occupancy.
Value Reduction
The Court ultimately reduced the value of the property from $16,855,500 to $13,400,000.
On a per square foot basis this dropped the value from over $135 psf to under $108 psf.
Key Takeaway
Market vs. actual rent was the primary driver of the decision. The Court found the robust comparable market rent analysis most persuasive and credited the owner’s appraiser for concluding to a rent within the range of market comps. The indication from the Court’s decision is that newly entered leases at comparable medical office properties are stronger evidence of market rental rates near the valuation date than an in-place rent from a legacy lease at the subject property.
Twenty Five Germantown Road LLC v. City of Danbury, 2025 WL 3458896 (Nov. 24, 2025).
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