It’s been almost a year since the Treasury Department released its initial list of opportunity zones: distressed census tracts where real estate investors could stash tax-deferred capital gains income by investing it in major real estate projects.
Earlier this month, Commercial Observer dialed up Jonathan Paine, who’s helping lead JLL’s efforts to stitch together opportunity zone development deals, for a status update. Commercial Observer: What stage are we at in the first round of opportunity zone projects?
Jonathan Paine: I think we’re still in the early stages of capital formation. Do you see real estate investors using opportunity zones as a strategy for dealing with capital gains from their property portfolios?Actually, I think the most likely investors will be those who are liquidating non-real assets. I think that’s going to be the most likely source of the underlying capital that gets aggregated into opportunity zones. The opportunity zone allows the investor to look into a market where the puck is going. I’ve also seen deals marketed as qualified opportunity zone deals that are sort of half-built, where an opportunity zone investor could come in and continue to finish out the projects.