The Opportunity Zone Program

The Opportunity Zone Program

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The Opportunity Zone Program

BizNow updates us about the opportunity zone program. When the program was announced in late 2017, Dosch Marshall Real Estate Vice President Tripp Rich received a lot of calls about the opportunity zone program, including from firms he was not familiar with.

The initial prospect of the tax exemption was so attractive and unheard of that everyone wanted in. Houston showed particular promise: The MSA has the highest concentration of assets in opportunity zones — 21.7% compared to the national average at 12.6%, according to the commercial real estate data platform Reonomy.

“Houston should attract more opportunity zone projects than any other city,” Reonomy Vice President of Marketing Sam Viskovich said.  But investment interest in the program has dwindled, and Rich said the number of firms talking to him about participating has dropped.

There are at least three possible reasons for the slowdown in The Opportunity Zone Program Viskovich said.

  1. It could be related to the number of sites in high-targeted areas. Since the program used 2010 census data and input from local leaders, some zones were already experiencing an influx of capital. 
  2. He also noted the maturing cycle could have some investors tightening the purse strings and focusing on the tried-and-true deals.
  3. But some of the drop may just be that deals haven’t happened yet, not that they won’t happen at all.
Rich expects a big rush to close on sites closer to 2020. Opportunity zone projects follow the traditional development timeline and process — the deals take time. It could take up to 12 months after the site is under contract to break ground.

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