The January 1, 2025 reassessment added an estimated $5.5 billion in assessed value to Indianapolis commercial and industrial parcels. A large share of that landed on downtown office buildings - and for many of those buildings, the new value assumes an occupancy level the market simply does not support in 2026.
If you own or operate a downtown office property, this is the gap to exploit on appeal. When an assessor trends a value upward on the assumption of healthy occupancy, but your building is carrying real vacancy, the assessment overstates the property's actual market value-in-use. The income approach is the tool that proves it.
Three approaches, and the rule that matters
Indiana assessors generally start with the cost approach - what it would cost to replace the building, less depreciation. That is fine for many property types. But for income-producing property like office buildings, assessors are required to consider all three approaches and apply the lowest indicated value:
- Cost approach - replacement cost less depreciation.
- Sales comparison approach - what comparable buildings actually sold for.
- Income approach - value derived from the income the property actually produces.
The phrase to remember is lowest indicated value. If the income approach produces a lower number than the cost approach - and for a half-empty office tower it almost always does - that lower value is what should control. Over-assessment happens when the cost-based trended number carries the day even though the income reality is far weaker.
Why downtown office is over-assessed in 2026
Office buildings often carry trended values that assume occupancy above reality. When an assessor applies a market-wide trend factor without accounting for a specific building's vacancy, the result is a value that prices the building as if it were full. In a soft office market, that produces systematic over-assessment.
The Mile Square has seen meaningful commercial movement, but the recovery is uneven - retail and conversion activity is not the same as office leasing strength. See our Mile Square commercial recovery analysis for the broader picture. The takeaway for office owners: do not assume the assessor's trend reflects your building's actual lease-up.
The evidence that wins an income-approach appeal
An income-approach appeal lives or dies on documentation. PTABOA and the Indiana Board of Tax Review want to see the property's real economics, not assertions. Assemble:
| Evidence | What it proves |
|---|---|
| Rent roll | Actual leased space, rates, and lease terms |
| Vacancy schedule | The real gap between assumed and actual occupancy |
| Operating statement (12-24 months) | Effective gross income and operating expenses |
| Market cap rate support | The rate to capitalize net operating income |
| Concession/TI detail | Effective rent after free rent and tenant improvements |
The mechanics: take effective gross income, subtract operating expenses to get net operating income, then capitalize NOI at a market cap rate. The resulting value is your income-approach indication. If it sits well below the assessed value, you have the core of your case.
Warning
Use real, supportable numbers. PTABOA hearing officers discount unsupported figures, and an inflated cap rate or a cherry-picked rent roll can sink an otherwise strong appeal. Tie every input to a document.
A simplified illustration
Suppose a downtown building is assessed assuming 90% occupancy but is actually 65% leased. The income approach captures the difference:
| Input | Assessor's assumption | Actual |
|---|---|---|
| Occupancy | 90% | 65% |
| Net operating income | Higher (assumed) | Lower (actual) |
| Indicated value | Higher | Materially lower |
The actual NOI, capitalized at a defensible cap rate, yields a lower indicated value than the trended cost figure. Under the lowest-indicated-value rule, that lower number should govern. This is the structural argument that recovers over-assessed value.
How this connects to multifamily
The same logic drives multifamily appeals after the roughly $2 billion added to apartment assessments. The income approach is equally central there. If you hold mixed assets, read our Indianapolis multifamily income-approach appeal guide alongside this one - the evidence discipline is identical.
Where the cost approach goes wrong for office
The cost approach answers a question that has limited relevance to an investor: what would it cost to rebuild this structure today? For a downtown office tower, replacement cost can be high even when the building is functionally struggling. Two forces the cost approach handles poorly:
- Economic obsolescence - external market conditions (weak office demand, remote work, oversupply) that depress value regardless of the building's physical condition.
- Functional obsolescence - layouts and systems that no longer match what tenants want.
A trended cost figure rarely captures the full weight of economic obsolescence in a soft market. The income approach captures it directly, because lower demand shows up immediately as lower rents and higher vacancy in the actual operating numbers. That is precisely why the income indication tends to fall below the cost indication for distressed office - and why the lowest-indicated-value rule should pull the assessment down.
Building the file before the hearing
Treat the appeal like an underwriting exercise. The strongest presentations:
| Element | Why it carries weight |
|---|---|
| Trailing 12-24 month financials | Shows sustained, not one-off, weakness |
| Signed leases and rent roll | Documents actual contract rent, not asking rent |
| Vacancy and absorption data | Demonstrates the occupancy gap is real and persistent |
| Cap rate from comparable sales | Anchors the capitalization to the market |
| Expense detail | Prevents the board from disputing your NOI |
The more your numbers tie to source documents, the harder they are to dismiss. A board can argue with an opinion; it has a much harder time arguing with a signed lease and an audited operating statement.
If PTABOA says no
Office appeals are sometimes resolved at PTABOA and sometimes not. If the local board rules against you, the next step is the Indiana Board of Tax Review, a state-level forum where the income approach gets a fuller, more technical hearing. Many substantial commercial reductions are secured at that level rather than locally. Plan your evidence as if it may need to stand up there.
Filing and timing
For the 2025 assessment, the appeal is filed on Form 130 with the Marion County Assessor's Office. The deadline for the 2025 assessment (Form 11 mailed before May 1) was June 15, 2026. If you missed it this cycle, build your income-approach file now so you are ready the moment the next Form 11 arrives - see what to do when 2026 Form 11 notices land.
Find Your Property
Pull your building's assessed value and compare it against the income reality. Start at Marion County and go straight to commercial parcels.
Our property lookup surfaces assessment history and comparable commercial parcels, and our tax appeal service builds and presents the income-approach case for downtown office owners facing the 2026 surge.
Related Reading
- Indianapolis multifamily income-approach appeal for 2026
- Mile Square commercial recovery in 2026
- Marion County commercial and industrial assessment 2026
- Comparable sales evidence for PTABOA appeals
- Indiana property tax appeal guide for 2026
For methodology and escalation references, see the DLGF and the Indiana Board of Tax Review.