On March 2, the Economic Innovation Group (EIG) hosted a webinar to discuss the current state of the Opportunity Zones (OZ) marketplace. Michael Novogradac, Managing Partner of Novogradac, joined EIG to share highlights from the recently released Novogradac Opportunity Zones Investment Report: Data Through December 31, 2021 and share insights about what lies ahead in 2022 and beyond. 

Key Takeaways

EIG’s Director of Policy and Coalitions, Catherine Lyons, kicked off the webinar by providing a recap of federal activity and policy deadlines that occured over the past 13 months and may have influenced the OZ marketplace. 

Michael Novogradac then shared an overview of OZ investment activity in 2021, citing the results from a recent survey of more than 950 Qualified Opportunity Funds (QOFs). 

  • From December 2020 to December 2021, investments of surveyed QOFs jumped from just over $15 billion to $24.4 billion. The majority of this growth occurred in the last six months of the year.
  • Novogradac stated that the sharp growth in investment is likely attributed to market maturation, and was not necessarily driven by the expiration of the five-year OZ tax benefit at the end of the year. He shared that this deadline may have accelerated decision making on the fringes, but by-and-large, investors have oriented themselves with the OZ policy and have an increased level of comfort executing OZ investments. 
  • Investments in multi-family residential continue to dominate the marketplace, and approximately one-third of OZ investment in this market segment has gone to support affordable and workforce housing. 

Rachel Reilly from Aces & Archers then provided examples of how OZ investors directed funds in 2021, highlighting projects and funds including: The Phoenix Community in Columbus, Ohio; Black Impact Fund in Los Angeles, California; Willkommen in Cincinnati, Ohio; Hoosier Solar in Indiana; and The OPAL Fund in Alabama. 

Lyons, Novogradac, and Reilly then discussed what lies ahead for OZs and the marketplace. The speakers shared insights on whether there will be new investment trends in 2022, the outlook for legislative improvements in the coming year, and if investment volume will continue to grow in the coming years. 

Resources Discussed

Visit EIG’s OZ Resources webpage for additional information including deal profiles, mapped activity, and recordings of previous webinars. 

Opportunity Zones