Cost Seg Building

A Blog About Tax Savings for Building Owners

Spartanburg County Welcomes a Game-Changing $2.8B High-Performance Computing Center

April 22, 2025 / / 0 Comments
Photo Credit: Binswanger

In a transformative move for Spartanburg County, South Carolina, NorthMark Strategies, through its subsidiary Valara Holdings, is investing a staggering $2.8 billion to convert the former Kohler manufacturing facility into a state-of-the-art high-performance computing (HPC) center. This ambitious project promises to redefine the region’s economic landscape, bringing cutting-edge technology, thousands of jobs, and sustainable innovation—all without costing taxpayers a dime. Here’s why this development is a big deal for Spartanburg and beyond.

A Bold Vision for the Future

The Kohler facility, once a hub for manufacturing, is being reimagined as a powerhouse for high-performance computing, a field critical to advancements in artificial intelligence, scientific research, and data analytics. NorthMark Strategies, a company focused on sustainable infrastructure, plans to leverage the site’s existing industrial framework to create a facility that not only meets the growing demand for computational power but also sets a new standard for eco-conscious development.

For a region already known for its manufacturing prowess, this pivot toward technology signals Spartanburg’s readiness to compete in the digital age.

Zero Cost to Taxpayers, Maximum Impact

One of the most compelling aspects of this project is its financial structure. Spartanburg County is not footing the bill for this massive investment. Instead, the county has strategically employed economic incentives to attract NorthMark’s investment while ensuring minimal strain on public resources. Through Fee-in-Lieu of Tax (FILOT) agreements, the county has reduced the property tax assessment ratio for NorthMark from 10% to 4% for 40 years, significantly lowering the company’s tax burden. Additionally, a Special Source Revenue Credit (SSRC) allows NorthMark to offset infrastructure costs, further sweetening the deal.

According to Spartanburg County Councilman David Britt, this project comes at “zero cost to taxpayers” and requires little from existing infrastructure. The facility will generate its own power using natural gas from an existing pipeline, ensuring it operates independently of the local grid. This self-sufficiency, combined with the county’s savvy use of incentives, makes the project a win-win for both NorthMark and the community.

A Sustainable Approach to High-Tech Innovation

Sustainability is at the heart of NorthMark’s vision. The decision to repurpose an existing industrial site rather than build from scratch minimizes environmental impact and preserves green spaces. By tapping into an existing natural gas pipeline, the facility will operate efficiently, reducing reliance on external energy sources. This aligns with broader trends in the tech industry, where companies are increasingly prioritizing eco-friendly solutions to meet both regulatory and consumer expectations.

Moreover, the project’s focus on high-performance computing positions Spartanburg as a hub for innovation. HPC centers are critical for processing massive datasets, running complex simulations, and driving breakthroughs in fields like healthcare, climate modeling, and machine learning. By bringing this capability to South Carolina, NorthMark is not only boosting the local economy but also contributing to global technological progress.

What This Means for Spartanburg County

The ripple effects of this $2.8 billion investment are profound. Beyond the immediate job creation, the HPC center is expected to attract ancillary businesses, from tech startups to supply chain partners, fostering a vibrant ecosystem of innovation. Local schools and universities may also see increased demand for STEM programs, preparing the next generation for careers in high-tech industries.

For residents, the project offers the promise of economic stability and opportunity. The influx of well-paying jobs could elevate the standard of living, while the county’s minimal infrastructure burden ensures that public services remain unaffected. As Spartanburg County Councilman Britt aptly noted, this is a “transformational” moment for the region—one that cements its reputation as a destination for forward-thinking investment.

A Model for Economic Development

Spartanburg County’s approach to this project serves as a blueprint for other communities looking to attract major investments. By leveraging tax incentives and existing infrastructure, the county has secured a multi-billion-dollar project without dipping into public funds. This strategic partnership with NorthMark demonstrates how local governments can balance economic growth with fiscal responsibility, creating opportunities that benefit everyone.

As construction begins and the HPC center takes shape, all eyes will be on Spartanburg. This isn’t just a local success story—it’s a testament to the power of vision, collaboration, and innovation. The future of high-performance computing is coming to South Carolina, and Spartanburg County is leading the charge.

What do you think about this exciting development? Share your thoughts in the comments below, and stay tuned for updates on Spartanburg’s high-tech transformation!

Filed a 2024 Tax Extension? Building Owners Don’t Wait—Get Your Cost Segregation Studies Done Now

April 21, 2025 / / 0 Comments

Tax Day for 2024 taxes has come and gone. Most building owners have filed for an extension on their taxes giving them 5 more months to get their corporate returns completed and 6 more for their personal returns. Now is the time to get those cost segregation studies completed so they are done well in advance of the true tax deadline.

I do cost segregation studies all over the country. We have a simple process that won’t cause you much headache at all. You can sleep confidently knowing the work was done by experts with a couple of decades of experience.

Trump Scraps Longstanding Federal Real Estate Rules Favoring Downtown and Historic Locations

April 17, 2025 / / 0 Comments
Photo Credit: Bloomberg

President Trump signed an executive order yesterday that reprioritizes where federal government offices need to be located. Like so much of the American government these days, this order goes back to when Jimmy Carter was U.S. President. He wanted to revitalize the central business districts and support the central cities. Now given so many central business districts are suffering as a result of local, state and federal Covid policies, central districts once the source for fun, entertainment, restaurants and office workers appears to be hurting in many areas. Trump’s order guarantees that more suffering is to come with the feds potentially moving out.

The government has a lot of extra space. Lease rates are very costly in CBDs and given the actions to trim the size of the overall goverment, Trump has decided we don’t need the space and we don’t need it downtown. Also, who wants to work downtown these days? Sure there are some cities that are still doing well. But if you are in a blue state, how are your central cities doing? How’s crime? Do people feel safe? How are the restaurants and shops doing in the central business district.

In a related story, the HUD building in Washington, DC has just hit the market. The federal government has put it up for sale.

This seems like a smart move by President Trump. It’s a good move for the tax payers and federal workers I suspect. It will cause more pain though for central business districts and the owners of commercial real estate.

Colliers Closed Transactions Q1 2025 for Greenville and Spartanburg, CS

April 17, 2025 / / 0 Comments

It’s nice to see the closed transaction activity is continuing here in the Upstate of South Carolina. Many of us expect that we will benefit more than most areas in the U.S. with the new Trump policy to bring manufacturing back to the U.S. When I talk with commercial real estate brokers, while sales might be slower, they are still quite busy with leasing activity. Colliers of South Carolina has a strong team in the Upstate as can be seen by the transaction activity.

Greenville Business Magazine just published the Colliers Q12025 Closed Transactions for Greenville and Spartanburg.

If you run a brokerage and publish transaction data, please reach out to me and I’d be happy to publish it.

John Murphy CSSI

AI Just Leveled Up: Turning Drawings into Stunning Renderings with a Single Prompt – CRE AI

March 26, 2025 /
AI Images created using ChatGPT

AI is going to affect every industry and commercial real estate is ripe to be impacted by this technology. Many are trying to figure out how to leverage it to make their own businesses better and more efficient. Thomas Stephenson does a great job of showing different use cases CRE AI.

Topher Stephenson is head of operations at Aspire CRE, a real estate brokerage in Houston, TX and is someone you should follow if you’re in commercial real estate and want to learn more about AI and how it’s affecting the business. Below is his one of his tweets talking about

I will also recommend you check out the recent tweets from Life Sci RE Guy. He has some excellent images he created with the use of AI.

Commercial real estate seems to be one of the slower industries when it comes to the adoption of AI, but I think this is coming full steam ahead for it.

Minneapolis Office Buildings See Drop in Assessed Value for Property Taxes

March 25, 2025 /
Wells Fargo Center, Minneapolis, MN / Photo Credit: Bring Me the News

Central Business Districts continue to struggle to make a come back particularly in blue cities and states post covid. We’ve seen massive discounts in building values when sales have actually happened. Many office towers have seen 60-80% discounts from their last sales price.

Minneapolis continues to struggle and the taxing authorities are recognizing that the values aren’t what they used to be. That said, they have only taken a slight dip in terms of the assessed values placed on the properties for tax purposes.

According to the Minneapolis / St. Paul Business Journal, below are downtown Minneapolis’ top five largest office towers and the change in their valuations from assessment year 2024 to 2025, according to recently updated Hennepin County records.

  • Capella Tower, 225 S. Sixth St.: 2024 value was $147.7 million; 2025 value is $131.6 million, representing an 11% drop
  • IDS Center, 80 S. Eighth St.: 2024 value was $167.5 million; 2025 value is $135 million, a 19% drop
  • Wells Fargo Center, 90 S. Seventh St.: 2024 value was $173.6 million; 2025 value is $106.1 million, a 39% drop
  • U.S. Bank Plaza, 200 S. Sixth St.: 2024 value was $156.1 million; 2025 value is $111.1 million, a 29% drop
  • City Center, 33 S. Sixth St.: 2024 value was $139 million; 2025 value is $116.7 million, a 16% drop

The Wells Fargo Center sold at a substantial discount last year for $85MM. This was about 70% lower than it’s peak value in 2019. It would seem the tax assessors may still have a way to go before they get to “market” value.

The Hidden Tax Deduction That Saves Building Owners Thousands—And Most CPAs Miss It – Partial Asset Disposition

March 8, 2025 /
Photo Credit: Office Banao

Most building owners and their tax advisors miss this KILLER tax deduction. How do I know they miss it? Because they don’t call me to get these studies done. Partial Asset Disposition SHOULD be evaluated every year for every building owner whether you own commercial property or residential investment property. But that’s ONLY if you legally prefer paying LESS in INCOME TAX as well as REDUCE your recapture tax liability down the road in the event you decide to sell your building.

I just finished up one of these recently where it was $280,000 in interior improvements for an office. That seems like pretty standard stuff. Most tax professionals won’t even have this small of a project studied. It was all interior so most would just call it QIP and be done with it. (QIP is Qualified Improvement Property and gets a 15 year class life). In 2024, bonus depreciation was 60% so you could take 60% of $280,000 or $168,000 tax deduction. Awesome. The client just got a $168,000 and all it took was less than 5 minutes of his tax advisor’s time to figure that out. So it didn’t cost him much. Perhaps the tax advisor bills him $100 for his time to figure this out. Everything’s cool, right? Wrong. Wrong in a big way.

If the owner qualified for PAD – partial asset disposition – he should take PAD. (Note: there are some criteria as to if the improvement qualifies for PAD so the owner’s need to double check this with their cost seg firm and tax advisor).

In this scenario above, because the CPA was on top of his game and recalled this idea of a PAD, he reached out to discuss this particular project. We studied the improvement and did the PAD and did you know the owner ended up picking up an additional $118,000 in a deduction because he did PAD? That’s a net tax savings of about $40k after paying for the study. On top of that, since this property identified was tossed in a landfill, it gets removed from the basis of his building so when he goes to sell it, he will have less recapture tax to pay. If you don’t remove the property from your books that has been thrown away, you continue to carry something on your books that actually isn’t there any more. And you’ll end up paying more in recapture tax when you go to sell.

So in this scenario, if you don’t do PAD, not only would you be missing out on about $40k in immediate tax savings, but you’ll pay more in tax (recapture tax) when you go to sell your building.

So next time you are doing building improvement whether it’s interior or exterior and it’s over $100k, please remember to reach out and have a conversation with a cost segregation expert. These studies are not expensive.  By doing them you are assuring your accounting and depreciation are being done correctly and you get some significant tax benefits both now and when you sell.

John Murphy CSSI

Boost Tax Savings & Efficiency with Green Zip Tape: The Smarter Drywall Solution for Large-Scale Construction

March 6, 2025 /

We’ve clarified the pricing to use Green Zip Tape dry wall tape. The cost is $3/SF for the tape and we will guarantee you’ll see at least a 30% tax benefit.

Example: 40,000 SF hotel. Costs to build are $10MM.
👷 GZT Cost: $120,000 ($3/SF x 40,000 SF) – this is deductible (expense) so the net after tax cost is $75,600.
👷 We will guarantee you’ll see at least a $30/SF tax benefit at a 37% tax rate
👷 Tax Benefit is $1,200,000 guaranteed – that’s 32-33% of the cost basis accelerated but it’s quite possible the actual results go much higher. Using Green Zip Tape it would not be out of the question to see 40%+ reclassified.

GZT goes on 2x faster than regular dry wall tape. We have a special applicator gun that we will let you use. One man typically can knock out huge space. It’s lighter and easier to use. Less skilled finishers are needed saving on labor. It’s green so it helps with your sustainability initiatives and may help your pitch with city/county councils. It can help with LEED credits if you are chasing those.

When you go to sell the building, you’ll have the proof, the receipts as to how this building performs from an accelerated depreciation standpoint and it should be something that you market because the next owner will get bigger tax benefits from your building that he buys than he does from a comparable building NOT built with Green Zip Tape. There are a number of other benefits but I won’t put them all here.

This is for projects of about $10MM+ or more in new construction. Must have a big dry wall application so think multi-family, senior or college housing, hotels, hospitals and medical facilities. Non-profit might like it for the flexibility it provides with removable sheet rock panels or for the green building benefits but they can’t take advantage of the tax benefits and the tax benefits are not transferable like they are with 179D. But that might be coming…we’ll see.

JLL CEO Christian Ulbrich Discussed Q4 Beat on Top and Bottom Lines – Commercial Real Estate in Recovery

March 5, 2025 /

Global Commercial Real Estate giant, JLL, sees improvements in the market. Here’s the CNBC interview with JLL CEO Christian Ulbrich: We’re at the beginning of recovery cycle for commercial real estate. He discusses Jones, Lange LaSalle Inc. 2024 fourth quarter financial results.

The stock is up nearly 50% in the past year so clearly there is anticipation that commercial real estate and development is coming back.

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