As more of our financial and personal lives run through digital networks, skyrocketing demand for data centers has developers racing to deliver new supply. Private equity and REIT financing are fueling rapid growth amid highly publicized merger and acquisition activity. But when the public’s eye turns to the high prices in these transactions, the taxing authorities are rarely far behind.
Prudent developers and investors are keenly aware of the many business incentives available for new data centers Dedicated Server in Europe, from hiring and training inducements to abatements and sales tax exemptions for new equipment. The ongoing expense of ad valorem property taxes is often overlooked, but neglecting opportunities to curtail excessive assessments can become a costly mistake. Aside from the cost of financing and energy, property taxes tend to be the highest recurring expense of owning a data center.
Tax assessors often lack expertise in the data center market, and the unusual nature of these properties makes valuation using common assessment processes difficult. Further, because of constant change in the sector, even well-intentioned assessors may use outdated market data, which can reflect a misleading balance of supply and demand.
As a result, assessors often fail to properly value the real estate component of the property, forcing operators to pay more than their fair share of taxes. Knowing the ways that assessors commonly overstate the value of data center real estate can arm operators and developers with the tools to reduce this burden.
