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Published, Version of Record (VoR)Open Access (License Unspecified), Open Access
Published, Version of Record (VoR)Open Access (License Unspecified), Open
Report
Organizing Opportunity: How to Drive Responsible Real Estate Investment in Opportunity Zones
02 Aug 2019
DOI:
https://doi.org/10.17918/00010537
Abstract
Tax-advantaged real estate investment in Opportunity Zones has advanced from page 130 in the tax bill to the front page of the papers, and is now becoming a reality. In late 2018, fundraising announcements became commonplace and investors began diverting gains into qualified vehicles, and now construction is beginning on qualified projects. As much as we may be tempted to treat Opportunity Zones and the projects within them as a uniform asset class, in actuality the tool presents a diverse range of possibilities. The evolution of the market will bring wide variance across cities and their potential projects. With the fervor continuing to grow, we believe investors, economic development practitioners, elected officials, and others seeking to capitalize on the incentive need ordered thinking to understand and efficiently leverage a national landscape of over 8,700 tracts.
The Opportunity Zone tax incentive exists because current private capital markets solutions are failing to reach certain high-potential but historically underinvested parts of the country. Capital that is low on the risk-return spectrum tends to park in stabilized long-term assets in traditional geographies, often in entities driven as much by fee generation as value creation. Higher-cost capital rehabilitates or builds assets over short-term hold periods to generate elevated returns, or simply trades assets based on market timing. The markets do not provide a solution with the unique combination of risk appetite and patience to perform complex residential and commercial projects that accommodate underserved renters in evolving neighborhoods.
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Details
- Title
- Organizing Opportunity: How to Drive Responsible Real Estate Investment in Opportunity Zones
- Creators
- Bruce J Katz - Drexel University, Nowak Metro Finance LabMichael Saadine
- Publisher
- Nowak Metro Finance Lab, Drexel University; Philadelphia, PA
- Number of pages
- 6
- Resource Type
- Report
- Language
- English
- Academic Unit
- Nowak Metro Finance Lab; Lindy Institute for Urban Innovation
- Other Identifier
- 991021902029404721