Minneapolis' total property value falls for second consecutive year

The total value of property in Minneapolis dropped about 1% this year, according to the city assessor, marking the second consecutive year of decline.

New assessments mailed out earlier this month, which the city will use to calculate taxes payable in 2026, also signal the local property tax burden will shift more to homeowners.

That’s partly because commercial property values continue to decrease — especially downtown, where they fell 9.5% from last year. Office buildings in the urban core are down about 22%, City Assessor Rebecca Malmquist said during a Monday presentation to the City Council.

Residential values — including single-family homes, duplexes, triplexes and condos — grew 2.6% from last year.

Homeowners across the metro have complained in recent years about the double-whammy of the shifting tax burden and increasing levies. Unlike many communities, Minneapolis lacks growth that could cushion those impacts — perhaps making for difficult budget conversations in coming months.

Each December, local governments decide the total amount they plan to collect in property taxes to fund services for the coming year. That amount is based on properties’ assessed value and type.

Commercial and industrial properties make up about 16% of Minneapolis' total value. But because such properties are taxed at a higher rate, they comprise nearly 27% of the city’s tax capacity.

Under the new assessments, homeowners shoulder more than 53% of the city’s tax capacity. That share has grown 6 percentage points since 2020, following the rise of remote work and a strong housing market.

Apartments, which saw values drop 3.4% through last year, account for the remaining 20% of the tax capacity.

Minneapolis' levy for 2025 was 6.8% higher than in 2024, a hike city leaders blamed on factors such as inflation, the end of federal pandemic aid and mandated police reforms. Last fall, Mayor Jacob Frey said he planned to look for new revenue streams to ease the stress on homeowners in future years.

Asked to predict when the commercial real estate market might rebound, Malmquist said assessors act as historians, looking back at property sales and other data to estimate values.

“Our staff attend a lot of industry events with brokers and buyers and sellers,” she said. “I would say that just lately, we are hearing some optimism from those market players.”

That sense of hope is not reflected in the latest assessments “because we are looking backwards,” she added.

Recent shifts have not brought blanket relief to commercial property owners, which for decades have also been paying into the state’s general property tax levy. As distressed office buildings see lower assessments, that state tax burden will be redistributed to better-performing commercial and industrial properties.

The new values are based on sales between October 2023 and September 2024. A handful of high-profile downtown office buildings, including the Wells Fargo Center and Ameriprise Financial Center, have since sold for deep discounts to their previous values.

When determining valuations, assessors take a variety of factors into account, including: Market conditions; sales of similar properties; location; and the size, quality and condition of the property.

Property owners who disagree with their assessments can appeal. To do so, the city instructs taxypayers to first contact the assessor listed on their valuation notice. Many issues are resolved through a conversation; those that are not can be appealed to the Local Board of Appeal and Equalization or state tax court.