Opportunity Zone Magazine Volume 1, Issue 3 | Page 23

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This is a reversal of the long-term trend of OZ neighborhoods
lagging behind the nation in rent growth. Given the longterm
nature of OZ investment, this is good news and
important news for all investors.
OZS ARE EMPLOYMENT CENTERS WITH A WIDE RANGE OF
JOBS
The average OZ is a hub of employment. OZs have an average
of 2,745 jobs in them, compared to 1,848 jobs in all other
census tracts 2 . OZs are particularly strong in manufacturing
jobs, transportation, distribution, and wholesale trade, and
in some office-focused jobs including health care, public
administration and management. Many of these industries
are among the nation’s fastest growing employment sectors.
OZs are underrepresented in retail jobs and in high-end
professional services like technology, consulting and finance.
And data on tract-level wages also suggests that workers in
OZs are paid competitively – an equal proportion of workers
make $40,000 per year in OZs as in non-OZs. With OZs
already established as employment hubs, there are ample
opportunities for commercial and residential development
that leverages this employment strength. These strengths only
increase as real estate development increases in a community,
as development generates short-term construction jobs and
longer term jobs that are attracted to an area based on this
new development.
OZ rents increased 25% from
2010 to 2018, nearly identical
to the national average of 26%.
About half of all OZs exceeded
national median rent appreciation
over that time.
OZ RESIDENTIAL RENTS ARE RISING JUST AS FAST AS
OTHER PLACES
While some residential rents in OZs remain low, recent rent
growth has been competitive. Of the nearly 8,000 OZs with
rent data, average rent is barely above $700, compared to $935
nationally 1 . However, rent growth in OZs has kept pace with
the rest of the country – OZ rents increased 25% from 2010 to
2018, nearly identical to the national average of 26%. About
half of all OZs exceeded national median rent appreciation
over that time. And this above-market rent growth in OZs are
all over the country, as the map here shows.
OZ RESIDENTS ARE SEEING COMPETITIVE INCOME
GROWTH
Incomes are substantially lower in OZs 3 . This is a primary
rationale for OZ designation, after all. The median household
income of OZ tracts in 2018 was about $37,195, nearly $25,000
less than the national median. And barely 5% of OZs have
incomes above that national median. These are the kinds of
statistics most concerned investors will point to.
But income growth in OZs has outpaced non-OZ tracts over
the past 5 years – a 15% increase from 2013-2018 compared to
13% elsewhere. This is an important development, as income
growth in OZs lagged behind the nation in years prior.
And it is not necessarily the case that this income rise comes
from new residents. Population growth in OZs over the past 5
years has been only half that of non-OZs (population rose by
an average of 135 people in OZs and 270 elsewhere 4 ). Having
incomes in OZs rise at or above national levels opens up many
new investment opportunities through stronger spending
power and support for a stronger housing market.
OZS HAVE STRONG TRANSPORTATION ACCESS QUALITIES
OZs generally have strong transportation infrastructure
and services. Good transportation of all modes – auto,
transit, and rail – is critical for business and residential
growth, especially in urban areas. More than half of all
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