The window of opportunity is open in the Windy City. As part of the 2017 Tax Cuts and Jobs Act, Opportunity Zones are a new government program created to incentivize investment and development in designated low-income communities across the country.
Over the next ten years, investors can reinvest in these distressed and under-developed properties and land parcels for significant tax breaks on capital gains.
As the third largest metro in the United States, Chicago is full of potential, especially in these designated Opportunity Zones. Read on to discover Chicago’s areas of opportunity based on asset class, specifically in Cook County, Kane County and Lake County. Using Reonomy’s rich sales data, we explore the scope of available property in Chicago and its surrounding suburbs.
Cook County Opportunity Zones
Opportunity Zones are especially ample in Cook County, where 133 of the state’s 327 designated census tracts are located. The second most dense county in the United States, Cook County is bustling with commercial real estate investment and development. Currently, the city has big plans in the pipeline, including a $7 billion mixed-use project known as “The 78.” Spearheaded by Related Midwest, the plan includes developing a 62-acre parcel on the riverfront to build what will eventually be home to as many as 24,000 new employees.
Interested in investing in Cook County Opportunity Zones? Reonomy data shows a fairly diverse split amongst total assets in the county. Vacant land leads the total parcel breakdown at 27.2 percent, followed by multifamily and special purpose at 18.3 percent and 17.1 percent, respectively. Data also shows retail dominated this year’s past sales at just over half (50.5 percent) of the 2018’s total sales. As more mixed-use space is built, like with The 78, now may be an excellent time to consider investing in Cook County’s Opportunity Zones.
Kane County Opportunity Zones
One of Chicago’s western suburbs, Kane County received nine Opportunity Zone designations across the county. While traditionally a farming and agricultural community, Kane County is beginning to see more development. The town of Geneva is especially seeing more growth. Recently, plans for a mixed-use development at the former factory site of Cetron was approved. This includes plans for a six-unit townhouse building, 5,450 square feet of retail space and 20 apartments. Similarly, StreetScape is pitching a multifamily development near downtown that would add a mix of single-family houses, townhouses, and apartments for a total of 42 new homes.
It’s no wonder building is blossoming — vacant land dominates the total parcel breakdown in Kane County at 36.9% of the total asset breakdown. Additionally, agricultural properties made up 23.6% of 2018’s total commercial real estate sales. For developers especially, Kane County appears to be ripe with vacant land — something to consider when investing in the area’s Opportunity Zones.
Lake County Opportunity Zones
Situated Northwest of the city, Lake County is also seeing fairly steady economic development. As Chicago’s center city continues to grow, the effects are rippling in the surrounding suburbs. Lake County has particularly seen an uptick in jobs and infrastructure as a result of Chicago’s building boom. In fact, the county ended 2017 with a 10 percent increase in jobs since 2010.
More jobs mean more housing needed to support local employees. Investors and developers looking at Lake County’s Opportunity Zones should consider the area’s largest asset class of multifamily. While sales were relatively low in 2018, the opportunity to unlock off-market deals and invest in the sector is definitely there.
Ready to find property in Chicago’s Opportunity Zones? Learn more about the market’s only Opportunity Zone search feature, here.