Standing outside the vacant Memphis Riverline Hotel, Shelby County Assessor Javier Bailey Sr. delivered a blunt warning Monday: the county's tax base is deteriorating, and homeowners could end up paying the price. Bailey said downtown Memphis's central business district is now sitting at roughly 17% vacancy, with large buildings across the skyline empty and generating no property tax revenue for county projects.
The warning came as Bailey released his 'State of the County Tax Base' report and announced plans for a November 2026 economic summit, according to WREG. Bailey said the county must act immediately, reporting that growth in some sectors and locations is not occurring fast enough to offset erosion in the commercial tax base. He compiled the report's facts and figures over several months before Monday's announcement, per the same station's account.
Why Commercial Vacancy Hits Harder Than Homes
The math behind Bailey's alarm traces back to state law. Under Tennessee Code § 67-5-801, commercial and industrial real estate is assessed at 40% of its appraised value, compared to just 25% for residential property — meaning that when commercial values erode, local governments take a disproportionately larger revenue hit than when home values fluctuate.
That erosion isn't happening in isolation. Bailey pointed to this year's temporary hiatus of some Memphis in May events downtown, which stripped millions of dollars in tourist spending from the area and hurt urban retail and dining foot traffic, per the station's report. He also noted that Shelby County's population is contracting by more than 5,000 residents annually even as county government continues spending while the tax base stays stagnant.
Billions in Looming County Obligations
The stakes are high because Shelby County has committed to building a new hospital campus and new schools, and is discussing a new jail — projects that together involve billions of dollars, the same account notes. Separately, cost estimates for a proposed 3,700- to 5,000-bed justice facility to replace or consolidate the aging downtown jail at 201 Poplar Ave. are more than $1 billion and climbing, per the Tri-State Defender.
Bailey warned that homeowners may have to carry the burden of the deteriorating tax base if the commercial erosion continues unchecked. He has called on local officials to meet and develop a collaborative strategy, and per WREG's reporting, those officials plan to work together to address the decline. Bailey said any turnaround strategy will take about five years to bear out, though he believes local officials working together can arrest the decline in the county tax base.
A Split Market: Office Towers Struggle, Warehouses Thrive
The distress is not spread evenly across downtown's commercial real estate. Class A office buildings maintained a 91.2% occupancy rate in mid-2025, while older Class B buildings suffered a 21.7% vacancy rate, according to data reported by TenantBase. Meanwhile, WREG's report also flagged low vacancy in the county's industrial sector, contrasting with struggling downtown offices.
What Happens Next
Bailey has been meeting with various leaders about the tax-base issue and hopes local leaders will gather in November to hammer out a plan, per WREG. He said city and county governments need to pay close attention to the issue now.
Bailey is the recently elected Shelby County assessor.
