Since their release at the end of 2017, Opportunity Zones have been the darling of the commercial real estate community, especially in the Lower Hudson Valley. The federal tax program stands to spur economic development in distressed census tracts throughout the United States by offering tax breaks on capital gains to investors who hold assets for at least five years. With such valuable benefits at stake, properties values are rising as investors and developers scope out these nominated areas’ potential.
Despite the fact that most of New York’s Opportunity Zones are located in New York City, there’s plenty of census tracts peppered throughout New York State hungry for investment. In Westchester County, particularly, 12 different census tracts have been qualified as Opportunity Zones, spanning from Port Chester to Tarrytown.
Interested parties know the potential is there, but with demand rising, how can they strategically find these properties before others do? Especially in Westchester County’s most lucrative submarkets, like office and multifamily, it’s vital investors have a tool to quickly locate and analyze workable options.
Modern commercial real estate (CRE) technology backed by off-market data can transform the Opportunity Zone prospecting process, from initial phases of sourcing through deal-making. As competition for these zoned assets heats up in Westchester County and beyond, this robust technology enables users to streamline their Opportunity Zone property pursuit to close deals before the competition does.
The Off-Market Difference
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Although “on-market” listings and promoted sales provide a decent baseline for investors interested in Opportunity Zones, they only allow a myopic view of what properties are available. Seasoned real estate professionals will know that everything has a price, and while some assets might not be listed as “for sale,” it doesn’t eliminate them from consideration.
CRE technology, like Reonomy, utilizes a comprehensive off-market data trove to deliver the nation’s entire commercial real estate supply. Comprised of both listed and unlisted properties, this data makes possibilities limitless — in and outside of Opportunity Zones. Users can search specifically for assets in designated census tracts while layering on a variety of geospatial and transactional filters for maximized results. Ultimately, those who leverage this information have a wider, enriched scope of properties to consider, opposed to those who only rely on sales listings.
In addition to its expansive range, the depth of this data is equally invaluable. Particularly in deal-making where its imperative to be armed with ample information, rich, granular asset data, including sales, debt and ownership records, can empower stronger deals.
Hyperspecific asset criteria sourced during prospecting can be used to leverage more flexible negotiations directly with property owners, instead of elusive LLCs and other gatekeepers. In Opportunity Zone deal-making where demand is already high, this information can help users stand out from the competition by personalizing a pitch and securing a higher chance of closing a deal.
An Ascending Office Market
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Due to its vicinity to bustling New York City without the lofty rent prices, Westchester County has seen recent success in the office sector. In White Plains, particularly, office space is a hot commodity; overall vacancy rates have decreased from 22 percent to 15 percent over the past three years.
Rents are at an all-time high as well, topping $40 per square foot. Additionally, Newmark Knight Frank reported nearly 450,000 of leasing activity throughout Westchester County at the end of Q3 2018–an increase 35 percent from the quarter before. Such positive indicators point to positive growth, something local professionals should consider when exploring the area’s Opportunity Zones.
Reonomy data indicates 4,747 different commercial assets situated in Westchester County’s Opportunity Zones. More than 110 of these properties are categorized as office, and include specific buildings like medical and financial spaces. This also includes the 546 mixed-use properties that likely include additional office spaces. Investors who want to take advantage of the market’s success can leverage technology like Reonomy to explore properties on an individual level. This allows them to see physical details, like lot size and total units included, as well as transactional data, like most recent sales price or lender. This allows potential buyers to know their office spaces inside and out before making a formal offer.
Industrial ‘Flex’ Spaces in High Demand
Industrial assets are garnering attention throughout Westchester County, as well. Warehouses are especially of interest; these big-box spaces, often referred to as “flex” spaces for their adaptability, are being repurposed into offices and showrooms across the Lower Hudson Valley. Various big-name companies have already taken advantage of the area’s more affordable prices, like Tesla, who recently leased a 35,000-square-foot warehouse in Greenburgh as a showroom and service center.
There are currently 219 different industrial assets in Westchester County’s surrounding Opportunity Zones, including storage units and “big-box” warehouses. For investors interested in renovating these types of assets, users can search for buildings over a certain size using CRE technology.
For example, Reonomy data indicates there are 170 different industrial assets over 5,000-square-feet. This does not include the 250+ generalized commercial assets also in the platform that are of the same size. Professionals looking to strike a deal can dive deeper into these individual assets to uncover owner information and, in turn, take the next step in investing in Westchester County’s Opportunity Zones.
There’s no doubt demand for these designated properties will only continue its trajectory. Rather than falling behind the competition and losing out on the area’s prized properties, CRE technology and off-market data are the key to making smarter, savvier purchases.
To search for Opportunity Zones in Westchester County, try the Reonomy platform for free, here.