Opportunity Zone Magazine Volume 1, Issue 3 | Page 23

23 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 OPPORTUNITYZONE.COM