{"id":1004280950,"date":"2018-11-20T11:42:44","date_gmt":"2018-11-20T19:42:44","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004280950"},"modified":"2022-12-07T22:19:28","modified_gmt":"2022-12-08T06:19:28","slug":"industry-execs-dont-exploit-opportunity-zones","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/industry-execs-dont-exploit-opportunity-zones\/","title":{"rendered":"Don’t Rush to Opportunity Zones"},"content":{"rendered":"

By Holly Dutton<\/p>\n

\"\"<\/a>The Opportunity Zone Program instituted along with the Tax Cuts and Jobs Act of 2017 has caught the eye of many in the real estate development arena across the country. The program encourages private investment in low-income urban and rural communities by offering big tax cuts to companies that hold onto the investment for at least 10 years.<\/p>\n

Within the 8,700 zones that have been established in the U.S., investors can defer capital gains taxes and avoid paying taxes on gains. Qualified investments in the zones must be made through opportunity zone funds and can be real estate, businesses and infrastructure.<\/p>\n

While the program has been highly publicized and touted by the development community, many in the industry are cautioning against rushing into the program and instead advising companies to take their time and do it right to ensure that the program won\u2019t be lost.<\/p>\n

\u201cI think if this becomes another financial product that\u2019s super levered and is run by money people who don\u2019t really understand real estate and assets are over-leveraged and there\u2019s a downturn in five years and all of a sudden this all blows up, then I think there will be a problem and it\u2019ll be unfortunate, because it\u2019s a great idea,\u201d<\/em> said Jeffrey Fine, managing director at Goldman Sachs, at a panel during the NYU Schack Institute of Real Estate Capital Markets Conference in Real Estate Nov. 15 in Manhattan.<\/p>\n

However, Fine said he believes the \u201cvery localized\u201d<\/em> program can do well if those participating invest their own money, approach it in a disciplined way and have their own skin in the game.  <\/p>\n

\u201cThere\u2019s time,\u201d<\/em> said Fine. \u201cEveryone\u2019s rushing in and it sort of feels like there\u2019s this fleeting opportunity that\u2019s going to be gone in six months. If that\u2019s the case then it really wasn\u2019t a very good program to begin with.\u201d<\/em><\/p>\n

That sentiment was echoed by others on the panel who want to see the program renewed when the time comes.  <\/p>\n

Kirk Sykes, co-founder & managing principal at Merrick Capital Management, pointed to the \u201cextreme differential-ness\u201d<\/em> starting to happen in cities across the country, referring to the inequality gap that has continued to grow wider. According to the Pew Research Center, the gap in incomes between the rich and poor has increased steadily in the U.S. since the 1970s. Between 1970 and 2016, the gap between the top and the bottom of the income ladder has increased 27 percent.<\/p>\n

\u201cIf this doesn\u2019t work as it\u2019s tested and the have and have-nots get further and further apart, I\u2019ve got to believe that some section of this population is going to push back on the fact that this exists,\u201d<\/em> said Sykes. \u201cIt shouldn\u2019t be a tool we lose because we abuse it.\u201d<\/em><\/p>\n

David Welsh, founder & partner at Normandy Real Estate Partners, said his firm is preparing to launch a $250 million opportunity fund and they are confident the program can and will do well in the current environment.<\/p>\n

\u201cI\u2019m optimistic,\u201d<\/em> said Welsh. \u201cIt was a bipartisan-sponsored bill that came in with both parties\u2019 support\u2026I think it\u2019s a smart idea and hopefully it doesn\u2019t get taken advantage of, like a lot of things.\u201d<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Leaders in the real estate and finance sectors advised those looking to take part in the federal program to proceed with caution.<\/p>\n","protected":false},"author":745,"featured_media":1004280953,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21781,21782,21825,21783,23891,21742],"tags":[33435,43097,33267,43094],"class_list":["post-1004280950","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-real-estate","category-development","category-finance","category-investment","category-national","category-latest","tag-goldman-sachs","tag-merrick-capital-management","tag-normandy-real-estate-partners","tag-opportunity-zone-program"],"acf":[],"yoast_head":"\nDon't Rush to Opportunity Zones - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/industry-execs-dont-exploit-opportunity-zones\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Don't Rush to Opportunity Zones\" \/>\n<meta property=\"og:description\" content=\"Leaders in the real estate and finance sectors advised those looking to take part in the federal program to proceed with caution.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/industry-execs-dont-exploit-opportunity-zones\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2018-11-20T19:42:44+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-08T06:19:28+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/11\/multifamily-news-02b-e1542742209428.png\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"600\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Holly Dutton\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/industry-execs-dont-exploit-opportunity-zones\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/industry-execs-dont-exploit-opportunity-zones\/\",\"name\":\"Don't Rush to Opportunity Zones - 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