Opportunity Zones offer a significant long-term opportunity for retail, institutional, domestic and foreign investors.
- Some estimate that up to $100 billion could be deployed over the next several years.
- Timing is key. The clock starts ticking once capital gains are realized and funds should be invested 180 days afterward. Investors should focus on shovel-ready projects, ideally with regulatory approval in place, thus reducing regulatory risk.
- While opportunity zones are in economically distressed areas, not all “distress” is equal. Look for areas with strong job, income, population growth and CRE market fundamentals and/or where economic revival is beginning to take place.
- Among metros meeting those criteria are fast-growing markets in the Sunbelt, California and Mountain West, as well as Manhattan. Evaluation of individual deals should focus on the specifics of each investment. Tax benefits will differ for investors residing in different states, depending on the level of state capital gains taxes and whether an investor’s state tax law conforms.