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News Release - Michigan's PPT and Commercial Real Estate Impact
Repeal of Michigan’s Personal Property Tax Could Have Positive Ripple Effect on Commercial Real Estate Market
SOUTHFIELD, Mich. – May 10, 2012 – Michigan’s commercial real estate market could see a positive ripple effect if the state’s Personal Property Tax (PPT) on industrial equipment is repealed, according to Cam McCausland, SIOR, CCIM, a partner with Michigan-based commercial real estate consulting firm Plante Moran Cresa and the firm’s Director of Transaction Management.
“Within the broader commercial real estate market is a huge industrial sector,” explains McCausland. Michigan has approximately 570 million square feet in industrial space. Currently, about 85% of that is filled, so there’s a tremendous opportunity to introduce new manufacturing to Michigan or for current Michigan-based manufacturers to expand in their home state if the PPT is eliminated.”
McCausland says when Plante Moran Cresa works with clients who are considering purchasing, leasing or expanding property in Michigan, top issues are the labor market and the tax environment.
“We know that Michigan has a strong talent pool so we can tell that story, but we need to show that the recent reshaping of the state’s incentive programs and elimination of the MBT present a strong case for companies who want to do business here. The repeal of the PPT would certainly sweeten the pot and increase our competiveness to attract manufacturers and companies that serve the manufacturing industry,” says McCausland. “More than that, though, the repeal of the PPT would be a boost for Michigan-based industrial companies who have already demonstrated their commitment to the state.”
McCausland says that with Ohio having recently repealed its personal property tax, there’s a need for Michigan to keep up with its neighbors, in addition to aggressively pursuing new business. But he notes there’s a Catch-22; the state can’t attract and retain business if municipalities can’t provide the services businesses need to thrive.
“To have a vibrant commercial real estate market, municipalities need to support the investment that commercial real estate holders make by offering top notch, consistent public services. For the repeal of the PPT to be a draw, commercial real estate owners want to know there is an underlying tax structure that allows for both commercial property and communities to be economically viable. An environment where funding of public services and schools is always in flux repels commercial real estate and overall business growth.”
McCausland adds that, despite overall capacity, the existing inventory for certain types of highly specialized industrial space housing cranes and other large equipment is low and could be an area of growth within Michigan’s commercial real estate market.
“If replacement funding concerns are addressed, a PPT repeal would likely spark some quick movement to build new industrial space here for niche manufacturers.”
Media Contact: Barbara Fornasiero, EAFocus Communications:
; Ron Rotole, Plante Moran Cresa;