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OZ Investors Continue To Throw Money At Apartments

Contributions to qualified opportunity zones are on track to surpass $10B as turmoil in the for-sale market continues to push investors toward rental properties.

Multifamily developments have been the targets of close to $6B so far this year, according to Novogradac & Co. data reported by CoStar. By contrast, funds focused on other commercial property types have raised about $2B, per the data.


Investment in opportunity zones, which encourages revitalization in economically distressed areas, is mostly, if not completely, exempt from capital gains taxes. 

Multifamily has for months been favored by OZ investors, in part because fewer people can afford a single-family home, but also because the asset type lends itself well to long-term holds. 

Other commercial properties, such as office buildings, lose their value more quickly, Urban Land reported

“Offices reach their peak value the moment you lease them up,” Pinnacle Partners Managing Partner Leo Backer told UL. “They actually lose value as you get closer to tenants’ lease expirations five or 10 years later.”

Investment in opportunity zones totaled a record $9.24B in 2021, according to CoStar. Opportunity zone investments over the first nine months of 2022 reached $8.29B. 

These numbers are merely estimates, Novogradac & Co. principal Michael Novogradac said in his report, as they do not include data from proprietary or private funds owned or managed by principal investors. 

Total investment could be up to four times higher than the close to $33B reported since the program’s inception in 2018, according to CoStar.