Opportunity Zones and Retail Assets Among Best CRE Bets for HNW Investors in 2019

December 5, 2018 | National Real Estate Investor

John Egan

As high-net-worth (HNW) investors zone in on commercial real estate opportunities for 2019Opportunity Zones, multifamily, marijuana, retail and industrial are emerging as some of the key areas to watch.

1. Opportunity Zones

Among real estate professionals contacted by NREI, the topic of Opportunity Zones surfaced to the top. Experts anticipate that next year many HNW investors will seek to capitalize on the federal tax reform legislation passed in 2017 that included the establishment of Opportunity Zones. The provision allows for deferment of capital gains taxes for investment in ground-up and redevelopment projects in economically depressed locations.

Across the U.S., government officials have designated 8,700 Opportunity Zones, ranging from several-block-long urban stretches in big metro areas to entire towns in rural states, according to the 2019 Emerging Trends in Real Estate report, published by professional services firm PwC and the Urban Land Institute (ULI).

Opportunity Zones are a “major focus” of HNW investors, according to Neil Madsen, founding principal of New York City-based real estate consulting and management firm Madsen Advisors LLC

“I expect there to be a lot of activity next year with Opportunity Zones, but I wonder whether the actual investment opportunities will materialize fast enough to absorb the available investment dollars,” Yustein says.

Still, Opportunity Zones could have a “meaningful impact” for HNW investors, according to Lee Roberts, managing partner of SharpVue Capital LLC, a Raleigh, N.C.-based wealth management firm.

“As with all tax provisions, though, it’s important not to let the tail wag the dog—it has to be a fundamentally sound real estate investment first,” Roberts says.

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