Another major decline in office-building values is likely to put pressure on county leaders to raise tax rates on homeowners already facing higher bills due to increasing assessments.
The overall assessed value of existing office buildings fell 19% year over year, county officials said in announcing 2026 assessments on Jan. 16.
Part of the decline was due to the conversion of several aging office buildings to residential and hotel use. But most of it was a result of elevated vacancy rates owing to a changing employment landscape accelerated by Covid.
The assessed valuation of the entire commercial sector declined 1.5%, with drops in office-building values offset by increases in apartments (+6.2%) and general commercial property (+3.7%). The growth in the total value of apartments and hotels was due, in part, to the office-to-residential conversions.
Hotel valuations were down 3.8%.
On the residential side, the assessment total was up 3.2%. A total of 78% of homeowners saw year-over-year increases, county officials said.
The average assessed home valuation rose from $854,900 to $882,900, including single-family homes, townhouses/rowhouses and condominiums.
With real estate taxes providing nearly 60% of the county’s annual $1.7 billion operating revenue, County Manager Mark Schwartz and County Board members will face a challenge in finalizing a spending package that avoids both tax-rate increases and major spending cuts.
“It’s always a difficult balancing act,” said Schwartz, who has been county manager for a decade and previously served as director of the Department of Management and Finance.
All updated assessment information is available online on the county’s website.
The 3.2% assessment increase is virtually identical to the 3.3% year-over-year increase in average home-sales price in the county reported by MarketStats by ShowingTime.
For 2025, the average sales price of properties tracked by Bright MLS, the region’s multiple-listing service, was $928,998, up from $899,403 a year before, according to the MarketStats by ShowingTime data.
“Our economy is a very different economy than it was a few years ago,” Schwartz said in a video explaining how he makes decisions before proposing a budget each year.
Any ultimate increase in tax rates will fall disproportionately on the residential sector. Pre-Covid, Arlington County leaders tried to maintain a 50/50 valuation balance between residential and commercial properties — but the 2026 tax base stands at 57% residential and 43% commercial.
The current tax rate for residential properties is $1.033 per $100 assessed valuation. With no increase in the rate but factoring in the 3.2% assessment increase, the owner of a $1 million home would see a 2026 assessment of $10,661, up from $10,330 last year.
All property owners also pay stormwater-utility fees based on the size of their lot.
In a statement accompanying the assessment information, county officials said they are seeking public feedback on how to address budget challenges:
“The County Board’s direction to the Manager in addressing the budget shortfall asks for a review of all county services, taxes and fees. We encourage everyone to share feedback on the tradeoffs of service reductions, ideas to save money and options to increase revenue.”
Schwartz will present his fiscal year 2027 budget proposal in February, kicking off a two-month budget season. Board members are expected to adopt a budget and set tax rates in April.
While the county’s fiscal year starts July 1, any change to the tax rate would be retroactive to Jan. 1 and payable in equal installments in June and October.
(Updated to correct change in hotel valuations.)
