Opportunity Zones are here, and the commercial real estate industry is paying close attention. Established as part of the Tax Cuts and Jobs Act in 2017, the new government program is designed to stimulate struggling economies across the nation. Handpicked for specific economic criteria, over 8,700 designated census tracts are attracting investors and developers of all kinds for their tax breaks on capital gains.
While the benefits for investment are clear, many commercial real estate professionals are a little less clear on how to start their search. How, exactly, can investors efficiently locate and analyze these assets for investment? The answer lies in off-market data. As more players enter the Opportunity Zone market, off-market data and commercial real estate technology provide a simplified search experience to find prized properties before others do and empower stronger deal-making across the country’s most lucrative markets, in areas such as Chicago, Los Angeles and Miami.
Why Off-market Matters
The race to invest in Opportunity Zones is on. With demand for these properties climbing, the earlier real estate professionals invest, the better selection of properties they have to choose from. But as more players turn their attention to Opportunity Zone investing, the competition to source new properties will only stiffen.
This level of demand makes off-market data that much more essential, especially during the prospecting process. While listings platforms are great places to start a search, they only offer a narrow sliver of the entire stock of assets across the nation, making the chances of finding and buying a building or plot of land less likely. By contrast, off-market is comprised of the entire property stock — including unlisted assets. Off-market data platforms, like Reonomy, allow you to search specifically within Opportunity Zones and provide a holistic view of the area’s total properties; it’s this far-reaching view that allows investors to get ahead of the competition for high-demand assets.
The granularity of off-market data is just as valuable, especially in the latter stages of deal-making. There’s something to be said for the power of nuance. When reaching out to property owners to strike a deal, tailoring your pitch and accessing specific property, owner and portfolio information can maximize your negotiation. Access to accurate ownership and contact information also allow you to circumvent property gatekeepers and LLCs to reach decision-makers directly before the competition does.
Simplified Search in Major Metros
With a wide selection of Opportunity Zones across the states, which markets should investors and developers be paying attention to? And how can off-market data help in making better buying decisions? Opportunities in Chicago, Los Angeles and Miami are especially prevalent, with over 100 designated census tracts in each city. These large metros are seeing significant economic and business expansion; in terms of venture capital investment alone, Los Angeles ranks third in the country, while Miami and Chicago are ranked eighth and ninth, respectively. With more companies growing in these specific locations, now may be the right time to invest in office space or multifamily housing in each city’s surrounding Opportunity Zones.
Access to robust off-market data can help uncover viable assets near or in each of these metropolitan areas. Although listings offer a solid starting point, they limit investment possibilities. Leveraging off-market data helps uncover the sheer scope in these Opportunity Zones to increase the chances of finding a potential investment opportunity, and eventually, make a stronger deal.
With data, users can also compare markets to see which have a larger stock of available assets to consider. For example, Reonomy data shows there are more than 7,100 multifamily assets in Miami’s Opportunity Zones. Los Angeles has a far bigger supply of multifamily properties in Opportunity Zones with nearly 21,500 multifamily properties. Chicago’s Opportunity Zones have the most by far, with over 30,000 individual multifamily assets. Off-market data allows investors and developers to streamline their Opportunity Zone search to quickly find the assets that are right for them.
The depth of off-market data is invaluable; it’s this data that enables real estate professionals to create more customized, flexible deals after they’ve found the properties they want to pursue. Rather than going into a deal blindly, this technology provides extensive property information, including physical intel as well as transactional information, like sales records and debt history. Users can also view entire portfolios to see if there are other properties owners might be interested in selling. The granularity of information sets a stronger foundation in negotiation and facilitates insightful decision-making.
Regardless of the location or industry, off-market data and commercial real estate technology can empower a savvier search experience across America’s Opportunity Zones. With the click of a button, users can forego tedious sourcing methods and search specifically for property in Opportunity Zones across the country, enabling a friendlier user-experience and a leg up on the competition.
Richard Sarkis is CEO and Co-Founder of Reonomy, a commercial real estate data and analytics platform. Since the company’s founding in 2013, Sarkis has been instrumental in raising $68 in venture capital and led Reonomy through a successful web platform launch in New York City and the launch of a second, national platform in 2017.
Sarkis, an avid entrepreneur, has launched numerous companies, including an international arbitrage textbook company, a college marketing network and an offshore tech company.