Reviewing Opportunity Zones With Steve Glickman and Ira Weinstein

Article originally posted on HERE on January 7, 2021

The Opportunity Zones program has been around for more than three years now. Throughout this period a lot has happened, including last year’s health crisis and culminating with the 2020 presidential elections, which appeared to mark the passage to a new economic cycle. Multi-Housing News asked two Opportunity Zone experts to share their thoughts on the program’s performance so far and how it will function in the future, considering the current state of affairs on a global scale.

Ira Weinstein is a managing principal at CohnReznick and an Opportunity Zone practice leader, while Steve Glickman is the CEO of Develop LLC, an advisory firm dedicated to building and supporting Opportunity Zone funds. Glickman, an adviser to former President Barack Obama, was one of the co-founders of the Economic Innovation Group that built the Qualified Opportunity Zones program. Recently, the two co-authored a book—“The Guide to Making Opportunity Zones Work”—aiming to help investors benefit from this federal program’s incentives.

How has the Opportunity Zone program evolved since its launch?

Steve Glickman, CEO, Develop LLC. Image courtesy of Develop LLC

Glickman: Opportunity Zone regulations were finalized in late 2019, providing much-needed clarity on the program. But even before the regulations were finalized, we witnessed a steady climb in ambitious Opportunity Zone investments, with more and more investors expressing interest in becoming involved. This is now a program with tens of billions of dollars in play, which only scratches the surface of its potential.

What is the reported amount of capital gains nationwide?

Glickman: The pace of activity, although difficult to measure precisely, is now in the range of $15 billion to $20 billion per year and is likely on the upswing. There is a massive amount of funds that are part of the potential pool to invest in Opportunity Zones and ultimate capital gains depend on deal flow demand, along with investor priorities and interests. In theory, capital gains could be tens to hundreds of billions of dollars per year before the pool is exhausted, depending on the demand for viable projects.

Which regions/metros proved to be the most attractive to investors interested in OZs and what do you think made them so?

Glickman: Some of the nonmajor metro centers, such as Birmingham, Ala., Baltimore and Cleveland to name a few, have the most potential impact from the Opportunity Zones program and have garnered the greatest interest from investors. While these secondary and tertiary markets offer a low cost of entry, many investors are motivated to make a difference in these cities where capital is not as easy to come by. Some grew up in the region and are personally invested in giving back.

Weinstein: Yes. Many Opportunity Zones were selected by governors, with input from city officials who could identify momentum on the local level, along with proximity to areas with increasing activity. One criticism of the program is that some Opportunity Zones do not appear to be low income, but they technically are and are ripe with the potential for growth. Although the development itself may not happen in the lowest-income areas, the hope is that Opportunity Zone investment in the region ultimately frees up more public resources to concentrate on the neighborhoods that need it most, resulting in indirect benefits.

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