Dallas County, which has about 100,000 property tax protests annually, has a commercial base of $83.5 billion. Tarrant County, with roughly 70,000 protests annually, has $31.8 billion of commercial properties, excluding commercial land.

"Because of the lag in the appraisal and assessment process, there will be some delay in the effects," says Dr. Ray Perryman, one of the state's leading economists. "It is nothing like the national situation, but does have the potential to impact appraised values and tax collections on a temporary basis." The founder of Waco, TX-based Perryman Group adds that "it shouldn't last long," given the relatively strong multifamily and commercial markets.

Because there are so few sales these days, experts are having a difficult time measuring or even projecting the impact. According to CB Richard Ellis, office sales are averaging $168 per square foot; industrial, $57 per square foot; and retail, $133 per square foot. The multifamily market's average is $57,400 per unit in the region.

[IMGCAP(2)]Ben Loughry, managing partner in Fort Worth for New York City-based Integra Realty Resources Inc., tells GlobeSt.com that he's bracing for a 25% drop in retail property values and 10% to 15% dip in office values. "Industrial will fare pretty well," he says, citing the severity of the pullback in consumer spending as the determining factor. Multifamily assets are "the bright spot," he says.

Loughry believes it will be the biggest setback since the 1980s. "It's relative to where I see the softness in the market. Retail is the area that has the most vulnerability in the market," he says. "We have not seen the other shoe drop yet."

The impact will be more evident when there are more transactions to gage the market, which Loughry says will come at year's end or early 2009. "There is definitely going to be some adjustment in the ad valorem values in 2009 and probably 2010 also."

George Roddy, president of Carrollton, TX-based Roddy Information Services, is more optimistic than Loughry. Roddy says single-family properties will dip 2% to 3% while commercial values will drop, with property type and location as the basis. "The perception is greater than the fact as far as decreasing values," he contends. "We've not seen any decrease as it relates to commercial properties."

Roddy acknowledges 2009 could be rough in some sectors, specifically suburban cities like DeSoto and Cedar Hill, where a decline is starting to emerge. "They could lose more than 4% to 4%," he says.

Roddy, like Loughry, says retail will be the hardest hit. But, he's also quick to point out there are plenty of investors on the sidelines with capital earmarked for bargains. "When they come in here, pay retail and are glad they bought the property, just think what they'll think if they can come in and get some bargains," he says.

Steve Triolet, CBRE's research manager in Texas and Oklahoma, says property values are being discussed in all camps. "It's pretty safe to say, prices will drop in 2009, but the question is how to quantify it," he says. "I don't think they're going to drop as much as people anticipate."

Like Roddy, Triolet says there are bargain shoppers on the sidelines waiting to make their moves. And like the others, he says retail will be the hardest hit in values.

Because North Texas is still adding jobs and population, Triolet says the drop in values will be far less than other parts of the country. How much depends purely on how long the economic downturn lasts. "If it's longer than late 2009 or 2010, that's when we're going to see more dramatic drops," Triolet says. "We have a lot of momentum right now although it's slowly dissipating. I think if it's only a year, we can ride that out pretty easily."

Chief appraisers in Dallas and Tarrant County say it's too early in the data-gathering process to say if values will stay flat or decline. Neither Dallas' Ken Nolan nor Tarrant's Jeffery Law is expecting their values to climb. "Flat would definitely the point I'd be at right now if I had to guess," Law says.

Nolan says he's not drawing any conclusions right now. "We'll do what the market tells us," he adds. "Things are changing daily. We have no sales transactions so no one seems to know."

The chief appraisers and their teams will set values Jan. 1, with notices going out May 1. Municipal leaders should, if they aren't already doing so, prepare for revenue losses due to changing property values. "The bottom line is that revenue growth will be slower than normal which will require some planning," Perryman cautions.