Opportunity Zones: Where Do We Go From Here?

By Bill Mears


Opportunity Zones have sucked up most of the oxygen in the commercial real estate world since they were announced and the zones identified (for a basic overview, check out our report from last month). Rock County boasts several of them. Investors and communities have rallied to support and promote them. Blogs and articles have flooded the internet and our inboxes. Yet the Ides of March have passed and we still have no idea as to when we will see any investment and development generated as a result of the zones (and as NAIOP noted earlier this month, it’s not restricted to only real estate deals).


Investors who are able to participate in the tax incentive program recognize that the economics of Opportunity Zones become a little less valuable every day, given the hard stop date of December 2026 for realizing the tax deferral, so they’re hesitant to invest capital in Qualified Opportunity Zones over concern that the rules remain unclear.


Some of the delay is attributable to the government shutdown, but the IRS finally held a public hearing regarding Opportunity Zones on Valentine’s Day in a standing-room-only environment. So, it’s now April 2019 and investors and developers are still awaiting direction. As Joshua Pollard stated in his column in Forbes regarding the public hearing:


The IRS, therefore, must balance a very slender line if they are going to make community investors happy and spur the job growth that Opportunity Zones were intended to create in a very short period. The grand message can be codified to one simple phrase: Please make it good for investors, please make it good for communities, and please hurry up.


Note: An Opportunity Zone project is now underway in the Madison area, so deals are happening. Just make sure that you consult with your attorney and CPA firm before you leap!