March 20, 2019
A great deal has been written about the Opportunity Zone program. Passed in December 2017 as part of the Tax Cut and Jobs Act, the program creates incentives for investors to funnel capital gains into Qualified Opportunity Funds, which then invest in government-designated, low-income Qualified Opportunity Zones. The idea is that financial resources can be funneled into economically disadvantaged areas. Investors, meanwhile, can defer tax payment on gains for up to 10 years.
Yardi Matrix recently pointed out that there is enormous opportunity within this program. From a multifamily perspective, the research company noted that 1.9 million multifamily units are either in place or under construction within the nation’s 8,700 Opportunity Zones. Additionally, in its report, “The Big Opportunity for Investors in Opportunity Zones,” Yardi Matrix found that an additional 455,000 units are in the pipeline.
The report also pointed out that:
The potential for opportunity zone development is highest in the multifamily sector. The number of planned/prospective units represents 24.2% of the total stock.
Metros with the most in-place and under construction Opportunity Zone units were Washington D.C. (55,000); Phoenix (54,000) and Brooklyn, NY (49,000). Metros with the least number of units in place within these zones includes Fort Worth (1,996); San Francisco-Peninsula (5,005); and West Palm Beach (6,137).
Miami, FL topped the list of most planned/prospective units in Opportunity Zones, at 27,341, followed by Metro Los Angeles (25,426) and Washington D.C. (24,492). Suburban Chicago, at 50 units, was at the bottom of the list, as were Pittsburgh, PA (406) and Fort Worth (602).
Overall, “the potential for Opportunity Zone development is highest in the multifamily sector,” the report added.
For comments, questions or concerns, please contact Amy Sorter