January 14, 2019
By Richard Sarkis, CEO and Co-Founder of Reonomy
Created in 2017 as part of the Tax Cuts and Jobs Act, Opportunity Zones encompass more than 8,700 distressed communities across the country–554 of which are located in the state of Texas. To stimulate specific local economies, investors and developers are promised notable tax breaks on capital gains, just as long as they build, develop or renovate the property and hold it for at least five years.
Advantages aside, confusion remains on how to find property in Opportunity Zones. While on-market sales listings offer a decent start, they only serve up a sliver of possibilities. Off-market data, on the other hand, is comprised of Texas’s entire asset stock, including un-marketed, unlisted properties.
For instance, Reonomy data indicates the highest number of designated Opportunity Zones in Texas are situated within Harris, Bexar and Hidalgo counties. Combined, these counties are home to more than 80,000 individual commercial assets and land parcels. In Harris County, in particular, opportunities are especially abundant. Given its status as the most populous county in Texas and the third most populous in the country, it’s no surprise 16.3% of the state’s Opportunity Zones are located within the county.
Which markets should Harris County investors consider? Of the 52,927 commercial assets in Harris County, nearly half (25,661) are vacant land parcels, presenting developers with an attractive opportunity for investment. Additionally, the county’s burgeoning population is set to propel the area’s multifamily market, with 2018 unit absorption and occupancy rates steadily increasing and closing in on 90%. Multifamily makes up 11.9% of the county’s entire Opportunity Zone parcel breakdown. In conjunction with the amount of vacant land dominating the parcel breakdown at 60%, investors and developers should consider investing or developing multifamily property moving forward.
While considerably smaller than Harris County, Bexar and Hidalgo counties are also ripe with investment potential, specifically in vacant land. Within Bexar County’s 24 Opportunity Zones are more than 5,000 land parcels. Of Hidalgo County’s 21,466 commercial assets in Opportunity Zones, more than 14,000 are categorized as vacant land, as well. This asset class is thriving throughout both county’s designated census tracts, offering real estate professionals some serious development potential.
Regardless of county and asset class, off-market data and commercial real estate technology is an essential tool for prospecting and deal-making in Texas, and beyond. As demand continues to increase, this data will become more imperative in optimizing prospecting methods and securing the highest-yielding investments.
For comments, questions or concerns, please contact Amy Sorter