In the Mid-Atlantic, PerseusTDC, a Transwestern affiliate, is entitling a 235-unit apartment building in an OZ in Hyattsville, Maryland, to help bolster additional city tax revenue and add residentials units to communities in need. This moderately priced apartment building will seek environmental-friendly construction methods and provide metro-accessible housing at workforce housing prices.

Also, rent incentives, moving incentives and tax credits have been enough of a motivator for a Mid-Atlantic life sciences company to locate in an area classified as a Historically Underutilized Business Zone (HUBZone) by the U.S. Small Business Administration. Fortunately, in this case, demographics ensure there will be enough qualified candidates to meet the requirement that employees both live and work in the zone, and Transwestern Real Estate Services has found landlords amenable to some flexibility in a lease with its client to accommodate future growth.

And with healthcare accessibility and delivery continuing to be an important issue, it fit the strategy of another Transwestern client to purchase an asset in an OZ near a hospital as a long-term play.

Optimistic Outlook

All signs point to the current administration being OZ friendly and, with business investment picking up, we expect investors to keep OZs on their radar, as the benefits can be significant if the situation meets the parameters of a sound business strategy. More emphasis on reporting should also shed light on where OZ investments are succeeding or failing from a community betterment perspective.

The economic crisis created by the pandemic may cause some investors to shift their strategies, especially when the plight of small businesses has become more acute and the desire to enrich and preserve local communities is gaining momentum. Many of the areas disproportionately affected by the pandemic are also those in need of investment dollars, and owners embarking on the sale of property in OZs would certainly benefit from highlighting the associated financial advantages. There is no guarantee that OZs will benefit all parties across all geographies equally, despite the good intentions of the original legislation. However, OZs can be a win-win – re-investing capital gains by those willing to take a greater risk with their investment dollars and creating the infrastructure to support a better future for residents.