National Opportunity Zone Trends

Reonomy's look at the impact of Opportunity Zones on U.S. commercial real estate investment.

The Opportunity Zone Program officially came to fruition in the Tax Cuts and Jobs Act of 2017.

The idea of the program? To incentivize investment in distressed areas of the country by offering long-term tax cuts to those that buy and hold assets within certain qualified census tracts.

Over the last decade or so, as secondary markets have become more livable and suitable for economy-driving companies, the theory for such a program was that investment could continue to spread to areas most in need of an economic boost.

The numbers show, that despite this thought, investors have continued to move more and more towards risk-averse markets.

What remains to be seen is whether or not the Opportunity Zone program can have its intended effect, making assets in these markets more enticing for investors—and if so, to what degree.

Here, we take a deep-dive into the number of investments and sales prices in qualified Opportunity Zone tracts, as a way to build an initial understanding of the reform and if it’s actually curtailing declining investment in areas of need.

The early indications? Based on Reonomy data, not so great.

An irreversible trend?

Over the last 20 years, Opportunity Zone tracts have continued to see a declining proportion of total commercial investments.

Despite the initial design of the program, investment volume in now-qualified census tracts has actually decreased post-legislation. Opportunity Zone assets accounted for a larger portion of total CRE investment sales volume before the tax incentive program was ever created.


In 2000, 15.59% of all commercial transaction activity was in what are now designated Opportunity Zones. In 2018, just 10.7% of all transactions were in Opportunity Zones.

As a result of this trend, a few different conclusions can be made:

  1. The lack of clarity surrounding the rules of the development program has made investors increasingly wary to build and acquire assets in these areas. This is an interesting dilemma considering Opportunity Zones were created to make investments in overlooked communities more attractive.
  2. With just 10.54% of all investments coming from Opportunity Zones in Q1 of 2019, another argument that could be made is that the law has yet to have its intended effect.

Declining Sales Prices

Despite losing share of investment activity, from early 2015 to mid-2018, Opportunity Zone assets outperformed non-Opportunity Zone assets in sales price appreciation.

As of July 2018, that trend changed, however, caused by both an acceleration of price appreciation in non-Opportunity Zone assets, and a deceleration of price appreciation in Opportunity Zone assets.

From March 2018 on, Opportunity Zone assets saw a decline in the 12 month rolling average of sales value.

All in all, the initial signs show that the Opportunity Zones program is still hanging in the balance, and has yet to create traction in areas of need as intended.

Going forward, Reonomy will continue to monitor Opportunity Zone transactions around the country to truly gauge its impact over time, and to see whether or not these initial trends continue on or begin to pivot.

Read more about Reonomy’s Opportunity Zone property search here.