Will Opportunity Zone designations make proposed megaprojects more appealing to investors, accelerate development in neglected corridors, both, or neither?
- A survey of federally-designated Opportunity Zones illustrates Philadelphia’s readiness for transformative economic development. Intended to spur investment and job creation in distressed communities, Opportunity Zones include low-income census tracts and adjacent areas nominated by the state and certified by the Secretary of the Treasury.
- Several of the designated areas include large sections of fast-growing neighborhoods, such as University City, Callowhill, and Kensington, while others are in long-neglected, disinvested neighborhoods outside of the CBD. Notable large-scale development projects already proposed in Philly’s Opportunity Zones include uCity Square, Schuylkill Yards, North Station at Broad Street and Indiana Avenue, and the Beury Building at Broad and Erie.
- Will the program incentives catalyze development and investment in such projects? It remains to be seen if adequate market demand exists to kick off these long-term efforts, and guidelines from the Treasury Department and additional state/local financing packages are still forthcoming. Long-term, private equity investors seeking shelter for capital gains are the most likely to pursue OZ investments at this time. Additionally, the zones may drive dollars to smaller projects in areas where the market is already taking off, notably Washington Avenue, Callowhill, and Fishtown.
Source: JLL Research, Internal Revenue Service