Cherry-Picking Industrial Properties in Opportunity Zones

Real Estate Economics, Volume 50, Issue 5, September 2022, Pages 1201-1230

45 Pages Posted: 8 Feb 2023

See all articles by Jonathan Wiley

Jonathan Wiley

Georgia State University

Hana Nguyen

Gerogia State University

Date Written: April 9, 2021

Abstract

We examine the impact on industrial property prices following the launch of US Opportunity Zones – a location-based tax incentive program intended to attract investment into low-income communities. Using a national sample of commercial real estate transactions, we document significantly higher transaction premiums, when matched with comparable transactions in eligible tracts that were not included in the program. Consistent with development options that are incentivized by the program, we find that premiums are concentrated at properties with the largest amounts of excess land available, and we observe no evidence of spillover effects to properties that do not possess similar optionality. Among the designated Opportunity Zones, significant transaction premiums appear in areas that previously demonstrate high employment and population growth. Overall, we do not find evidence to suggest that the aggregate share of commercial real estate transaction volume to Opportunity Zones has increased following the legislation.

Keywords: tax incentives, location-based policy, clientele effects, commercial real estate, opportunity zones

JEL Classification: H25, I38, R38

Suggested Citation

Wiley, Jonathan and Nguyen, Hana, Cherry-Picking Industrial Properties in Opportunity Zones (April 9, 2021). Real Estate Economics, Volume 50, Issue 5, September 2022, Pages 1201-1230 , Available at SSRN: https://ssrn.com/abstract=4350307 or http://dx.doi.org/10.2139/ssrn.4350307

Jonathan Wiley (Contact Author)

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Hana Nguyen

Gerogia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

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