BALTIMORE MATCH MAKES INVESTORS WITH OPPORTUNITY
2019 is going to be a huge year for Baltimore, the Federal Government have introduced a new policy to revolutionise the city and match investors wishes to Baltimores needs.
It is called the BALTIMORE OPPORTUNITY ZONES
In Baltimore there are many neighbourhoods which remain under-served and stagnant as compared to other thriving neighbourhoods.
Under the new federal program the Government aims to bring investment and development into the different areas that need it, savvy investors and city officials are working together to spark this economic activity.
The Opportunity Zones tax incentive was included in the Tax Cuts and Jobs Act President Donald Trump signed into law in December 2018. The law gives tax benefits to investors that place unrealized capital gains into Opportunity Funds, which then invest in Opportunity Zones.
On April 20, Maryland Department of Housing and Community Development nominated 149 census tracts to be Opportunity Zones in Maryland. The U.S. Department of Treasury certified these 42 Baltimore tracts on May 18, 2018.
Mayor Catherine Pugh and Housing Commissioner Michael Braverman announced their planned “new era of neighborhood investment” at her weekly press conference Feb. 27. One of the key points of the “new vision” is designated impact investment areas in four areas of the city.
The East Baltimore zone includes Johnston Square, Broadway East, East Baltimore Midway and Coldstream Homestead Montebello. The West Baltimore zone includes Penn North, Druid Heights and Upton, all of which run along Pennsylvania Avenue. And the Southwest Baltimore zone includes Franklin Square, Poppleton, Union Square, Hollins Market, Mount Clare, Washington Village and Pigtown.
Opportunity zone funds will allow private investors to place capital gains into a fund that can be used to upgrade and redevelop a community with new housing, retail and other commercial projects thus revitalising the area.
PNC Financial Services Group Inc. is spearheading a nearly $500 million fund for equity and loans in opportunity zones. Weller Development is on the lookout for investors to help build Cyber Town USA. The development will, in turn, help boost surrounding areas like Cherry Hill, Brooklyn and Curtis Bay.
Baltimore has struggled with population decline in the last few years but still there is a very strong rental market due to job growth, employment has significantly grown in areas like Healthcare and Education.
Combine this with a widening gap between rent and mortgages and an increase in home prices, it’s plain to see why investors are interested in Baltimore for rental properties. The city is also starting to attract investment, according to Marcus & Millichap, from investors in major metros, such as New York, Los Angeles, and San Francisco.
Developers are primarily targeting areas in and around downtown Baltimore. Strong demand on the east side of the city has driven the vacancy rate there down 110 basis points over the past four quarters.
That is why “Opportunity Zones” policy was implemented, there is sufficient demand for rental property but not enough turn key stock, areas and properties need to be revitalised to facilitate the high demand for rentals.
Baltimore offers an exciting opportunity to get in low before it starts going up and up.