10 Promising Metropolitan Areas for Opportunity Zone Investment
- Posted: April 25, 2019
- Posted by: Travis Lynk
- Last Reviewed: April 25, 2019
A taxpayer hoping to take advantage of Opportunity Zone tax incentives has many locations to choose from on which to focus his or her investment. More than 8,700 Opportunity Zones have been designated throughout the 50 U.S. states, five U.S. territories, and Washington, D.C.
But the potential for positive impact, both for community residents and investors, is quite different from zone to zone. A recent study by the Brookings Institute shows that nearly 20% of Opportunity Zones were on the cusp of significant development, with property values already on the rise. An infusion of private capital to develop these emerging neighborhoods would enhance both the short- and long-term growth potential.
Here’s a list of metropolitan areas with Opportunity Zones that are poised to deliver growth.
As housing costs in San Francisco continue to rise, property in Opportunity Zones around Oakland will become more attractive for commercial and residential development. Much of the neighborhoods of Uptown, Jingletown, and West Oakland lie in Opportunity Zones and are already experiencing higher than average growth due to an expansion of the BART public transportation system into those areas.
Home values in these communities have increased more than 10% over the past year, and nearly 50% over the last five years.
San Jose, California
Zoning in the Bay Area has made development difficult, but Opportunity Zone designation in many areas of the city opens up opportunities for housing and commercial development. Many areas near downtown San Jose—home to Adobe, San Jose State University, and a planned Google campus—are designated Opportunity Zones. The demand for affordable, walkable housing in these areas is high.
Home values in San Jose increased 23% over the past year, and nearly 40% over the past five years.
Seattle suffers from an affordable-housing crisis, and Amazon’s plans to expand its footprint in the city will exacerbate the demand for residential development. The Beacon Hill area is a designated Opportunity Zone, and it is already seeing a rise in housing prices. For commercial developers, the International District lies in an Opportunity Zone; the program may stimulate additional demand for office space in this area.
Over the past year, housing prices in Seattle rose 13%, and nearly 50% over the past five years.
Los Angeles, California
Much of downtown Los Angeles and the surrounding southern and eastern sections lie in designated Opportunity Zones, including the LA Arts District. This area is already attracting new development, including a 125,000-square-foot shopping and office complex. Additionally, emerging neighborhoods west of Los Angeles also have Opportunity Zone designation, an area with a planned extension of public transportation.
Home prices in Los Angeles increased 9% last year and more than 35% over the past five years.
Portland’s Pearl District and Central East Side are designated Opportunity Zones. These areas abut the Willamette River and have already attracted a significant amount of commercial development over the past few years. Long tracts of riverfront land in these areas are also designated Opportunity Zones. Portland continues to be a less costly alternative to Seattle for businesses; as the industrial base has grown, affordable housing has become a priority.
Over the past five years, home values have increased almost 40%, with an increase of 2% in the last year alone.
San Diego, California
Some California cities have experienced tremendous growth in recent years; consequently, many suffer from an affordable-housing crisis. San Diego is no exception, but state environmental laws and local zoning issues have made development especially difficult. Attractive areas near central San Diego, just miles from the ocean and airport, have received Opportunity Zone designation, including Golden Hill and Barrio Logan.
Last year, San Diego home values rose more than 8%, with an increase of 30% over the past five years.
Phoenix grew by over 60 new residents a day last year, making it one of the fastest growing metropolitan areas in the United States. The city is home to two major college campus systems, and major businesses—including Apple and State Farm—employ thousands in the Phoenix area. Several emerging neighborhoods, as well as districts in surrounding Mesa and Tempe, received Opportunity Zone designation. Chandler, where Intel plans to bring an additional 3,000 employees to its already sizeable workforce, also includes several Opportunity Zones.
Home values in Phoenix rose almost 10% last year, and nearly 40% over the past five years.
New York City, New York
There are Opportunity Zones in each of the five boroughs of New York, but Brooklyn is especially promising for development. Within the next three years, nearly a million square feet of commercial property will become available, and the tech industry has a growing footprint in the borough. Most of Brooklyn Heights, Williamsburg, and the Brooklyn Navy Yard lie in Opportunity Zones. Other neighborhoods that have already experienced development, including Crown Heights, South Slope, and Bedford Stuyvesant, also fall in Opportunity Zones.
In the last year, home prices in Brooklyn have increased 10%, and over the last five, they’ve grown more than 35%. Rent has increased 12% over the last three years.
As the third-fastest growing city in the United States, Atlanta is experiencing an explosion in demand for residential and walkable commercial property. New developments in Bellwood Quarry and West Midtown are underway, making Opportunity Zones in neighboring Bankhead, Grove Park, and English Avenue attractive for development. The accessibility of the MARTA station in Bankhead makes it attractive for residential development.
Home prices in Atlanta have increased 15% in the past year, and by almost 50% over the past five years.
Opportunity Zones surround the Cumberland River in downtown Nashville, a city that has experienced significant growth in recent years. It’s a prime distribution hub for Amazon and Macy’s, and recent tax incentives enacted by the state are drawing more publicly traded businesses into the Nashville area. The Nashville Yards development, a four-million-square-foot mixed-use complex, is expected to be completed in 2021. The emerging East Bank, Edgehill, and 12 Point neighborhoods fall in designated Opportunity Zones.
Home prices in Nashville increased more than 11% last year, and 44% over the past five years.