Investment Tax Incentive

S. real estate investment tax incentive. Tax reform passed in December 2017 designated more than 8,700 low-income “opportunity zones” where capital gains taxes may be lowered or eliminated depending on how long an investment is held.S. population and 12% of the country’s land.

Written by Joel Nelson

03 / 25 / 19

2 min read

Washington D.C. is one of the cities with the most multifamily units under construction thanks to the opportunity zone program

A new white paper from Yardi Matrix offers insight into the impact of a U.S. real estate investment tax incentive. Washington D.C. is one of the cities with the most multifamily units under construction thanks to the opportunity zone program

Tax reform passed in December 2017 designated more than 8,700 low-income “opportunity zones” where capital gains taxes may be lowered or eliminated depending on how long an investment is held. Opportunity zones encompass about 10% of the U.S. population and 12% of the country’s land.

The white paper notes that opportunity zones have attracted intense interest from real estate investors because they “draw from a new base of largely untapped investors” and offer value-add opportunities in “new markets that were thought to be too small or risky as investment strategies.”

Among the opportunity zone facts reported in the white paper:

9 million multifamily units, 960 million square feet of office space and 180 million square feet of self storage space are either in place or under construction
The development pipeline—projects approved but not begun—includes another 450,000 multifamily units, 120 million square feet of office space and 12 million square feet of self storage space
As a percentage of total space, properties in place or under construction in opportunity zones represent 13.1% of total multifamily units nationwide, 13.7% of total office space and 11.4% of total self storage space
Ground-up development is likely to be a major focus of opportunity fund capital, since the law requires investors to significantly increase the basis of assets purchased. For properties in place, that would mean buildings in need of wholesale improvements, limiting the pool of assets that would qualify
Washington, D.C., Phoenix and Brooklyn, N.Y., have the most multifamily units in place and under construction
Houston, Detroit and Portland, Ore., are the leaders in office square feet in place and under construction
Metros with the most planned and prospective self storage space are Richmond, Va., Phoenix and California’s Inland Empire

Learn more about this still-developing investment vehicle in the white paper, titled “The Big Opportunity for Investors in Opportunity Zones.”

AUTHOR

Joel Nelson, senior marketing writer, joined Yardi in 2007. His byline has appeared in New York Real Estate Journal, Canadian Property Management and Los Angeles Lawyer, among others. He has won multiple awards from major professional organizations including the International Association of Business Communicators and Public Communicators of Los Angeles. Joel earned a bachelor’s degree from Pomona College.

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