Exploring Denver’s opportunity zones with off-market data

Reonomy data found more than 4,000 properties located within Denver’s opportunity zones

Richard Sarkis
CEO, Reonomy

Opportunity zones are taking the nation by storm – and Denver is no exception. As part of the 2017 Tax Cuts and Jobs Act, opportunity zones are a new government program created to incentivize investment and development in designated low-income communities across the country. Over the next 10 years, investors can reinvest in these distressed and underdeveloped properties and land parcels for significant tax breaks on capital gains.

Of the 126 different opportunity zones across Colorado, 37 are located within the Denver area. While zone designations are relatively new, demand already is strong. Investors and developers are keen on Denver’s promising economy – the city had a record-setting 2018 with over $2.28 billion in current or planned commercial development. The introduction of opportunity zones only adds another layer to the state of demand. But while interest in these incentivized properties has suddenly increased, the supply across the city is limited, making competition for investment much stiffer.

How can industry professionals better understand this new landscape and find assets for reinvestment? To navigate the nuances of opportunity zone supply and demand, Denver’s real estate community needs off-market data now more than ever. Rather than relying on on-market sales listings alone, off-market data opens the scope of potential options in these areas, so investors and developers can find the exact property they’re looking for. Our data shows over 4,000 different properties located within Denver’s opportunity zones. Below, we explore the options in Denver’s leading markets of multifamily and commercial office space and discuss the benefits of off-market data in the opportunity zone property search.

Multifamily continues to shine. Denver has experienced a growth spurt over the last decade. In the past seven years alone, Denver’s population has increased by 100,000 – and the growth doesn’t look like it will stop any time soon. The Mile High City is growing by a staggering 1.77 percent year over year, which is faster than some other leading markets, like Seattle and Atlanta, according to the U.S. Census Bureau.

Considering Denver’s burgeoning population, the demand for multifamily housing has, and continues, to grow as well. The city’s rate of per-capita multifamily construction currently ranks second in the country and is one of the top five metro areas actively building multifamily properties to accommodate its growing population. As more people move to Denver and its surrounding neighborhoods, investors and developers can capitalize on the need for affordable housing, especially in opportunity zones where return on investment can be maximized.

Our data indicates that of the more than 4,000 different assets situated in Denver’s opportunity zones, nearly a quarter are categorized as multifamily properties. Duplexes make up a majority of the entire asset class, with a total count of 807 different units in these designated locations. While the majority of these properties might not be marked as “for sale” on listings sites, investors know everyone has a price. This holistic view of off market opportunities broadens the scope beyond just the listings platforms to pinpoint the exact multifamily property in the opportunity zone they want to pursue.

Offices space is on the rise. Denver’s population has grown concurrently with its job market, which has, in turn, impacted Denver’s demand for office space. The 27 projects currently under construction and eight planned for development in downtown are expected to increase the city’s office space by 2.7 million square feet. With employment in Denver at an all-time high, now may be the perfect time to invest or develop office space in these zones.

There are over 200 office spaces in Denver’s surrounding opportunity zones. While this is relatively low compared to the number of properties in the multifamily sector, our data also shows nearly 1,000 vacant land plots available for office development in the city’s opportunity zones. Developers interested in exploring these properties further can leverage powerful commercial real estate data to uncover individual property nuances, like zoning restrictions and lot size and, in turn, make better-informed buying decisions.

Streamlining Denver’s search with data. The opportunity zone investment possibilities in Denver are virtually endless. So, how can real estate professionals better find and analyze potential new investments? With the recent democratization of data throughout the commercial real estate community, a new wave of technologies has emerged to help streamline the commercial property hunt – even those in these areas.

Data has unlocked off-market deal making from start to finish. From finding acquisitions to performing due diligence and reaching out to owners directly, the information that was once controlled by behemoth brokerages now is readily available to empower better decision-making. Commercial real estate data platforms allow investors and developers to expand their search to the country’s entire asset stock. Rather than relying on sales listings and books of business, off-market property data widens the scope of potential investments. From there, users can hone in on the specific properties they’re interested in by using filters and customizable criteria for stronger, more personalized searches.

The real value, though, lies in the granularity of off-market data used when interacting with property owners. For opportunity zone deal making where demand is high, transactional information, like sales records and debt history, give users a leg up on the competition. Additionally, accurate ownership information enables them to reach decision makers directly, rather than getting stonewalled by gatekeepers and limited liability companies.

There’s no doubt Colorado’s capital city will continue to flourish with construction and development. As Denver’s real estate market turns its attention to its opportunity zones, off-market data will become an essential tool for prospecting and deal-making.

Featured in CREJ’s Jan. 2-15, 2019, issue

Edited by the Colorado Real Estate Journal staff.