North Carolina’s Opportunity Zone program is entering a new phase, creating an important window for commercial real estate investors, developers, property owners and economic development organizations to understand how the program works—and where future opportunities may emerge.
Opportunity Zones are federally designated census tracts intended to encourage long-term private investment in economically distressed communities. For commercial real estate, the program can create opportunities to direct investment toward development, redevelopment and business expansion while potentially providing federal tax advantages to eligible investors.
What Is an Opportunity Zone?
The Opportunity Zone program was established through the 2017 Tax Cuts and Jobs Act to encourage private investment in designated communities. Investors who reinvest eligible capital gains through a Qualified Opportunity Fund (QOF) may qualify for certain federal tax benefits.
For commercial real estate, this can include investments associated with projects such as:
- Industrial and flex properties
- Multifamily and mixed-use developments
- Office and commercial projects
- Retail and neighborhood-serving developments
- Redevelopment of underutilized properties
- Business and infrastructure-related projects
The key concept is that Opportunity Zones are intended to encourage long-term investment, rather than simply providing a short-term tax benefit.
North Carolina’s Opportunity Zone Landscape
North Carolina currently has 252 Opportunity Zones designated under the original 2018 program, including 138 rural Opportunity Zones. These designations remain in effect through December 31, 2028.
However, the Opportunity Zone landscape is changing.
Under the reauthorized Opportunity Zone program, North Carolina has approximately 807 eligible census tracts from which it may nominate up to 202 new Opportunity Zones. The new designations are scheduled to take effect January 1, 2027.
This transition is particularly important for commercial real estate professionals. A property that qualifies today may not necessarily have the same Opportunity Zone designation in the future, while other areas could become eligible for the next generation of the program.
Why Opportunity Zones Matter to Commercial Real Estate
For investors and developers, an Opportunity Zone can be more than a designation on a map. It can become one factor in evaluating whether a property or development project makes financial sense.
Consider a commercial property with strong fundamentals but a need for substantial capital improvements. If the property is located within an eligible Opportunity Zone, the potential tax advantages associated with qualified investment may factor into an investor’s overall return analysis.
Opportunity Zone considerations can be especially relevant when evaluating:
- Development opportunities: Vacant or underutilized land in an Opportunity Zone may have potential for new industrial, multifamily, mixed-use or commercial development.
- Redevelopment projects: Older commercial properties may benefit from significant renovation, repositioning or adaptive reuse.
- Value-add investments: Properties requiring capital improvements may present opportunities to combine real estate fundamentals with an Opportunity Zone investment strategy.
- Economic growth corridors: Areas experiencing population growth, infrastructure investment or business expansion may offer investors the potential for both tax benefits and long-term property appreciation.
North Carolina Commerce specifically identifies business development, job creation, community revitalization, industrial redevelopment, mixed-use projects and increased housing supply as priorities for the new Opportunity Zone framework.
Location Still Matters
An Opportunity Zone designation does not automatically make a property a good investment.
Commercial real estate investors should continue to evaluate the fundamentals that drive value, including:
- Location and accessibility
- Market demand
- Tenant demand and quality
- Population and employment trends
- Zoning and permitted uses
- Development costs
- Infrastructure
- Rental rates and operating expenses
- Exit strategy
- Potential for long-term appreciation
The Opportunity Zone designation should be viewed as one component of an investment strategy—not a substitute for traditional real estate due diligence.
For example, an industrial property in an Opportunity Zone with strong highway access, nearby employment centers and limited competing inventory may warrant a very different investment analysis than a similarly designated property with weak market demand.
“Opportunity Zones can create compelling possibilities for commercial real estate investors, especially when strong market fundamentals align with long-term investment potential.”
Curt Britt, Senior Advisor, SVN Raleigh
The 2027 Opportunity Zone Transition
The next round of Opportunity Zones is particularly relevant for North Carolina commercial real estate.
According to the North Carolina Department of Commerce, 807 census tracts currently meet the federal eligibility criteria, but the state can nominate only 202 of them. North Carolina is using criteria that include business development and job creation, strategic local revitalization, and opportunities to increase housing supply in areas of high need.
That means the next generation of Opportunity Zones may be closely connected to broader economic development strategies.
For commercial real estate stakeholders, this creates a reason to pay attention to areas with:
- Planned industrial or commercial development
- Redevelopment initiatives
- Major infrastructure investments
- Employment growth
- Housing development opportunities
- Locally supported revitalization plans
The state’s process is designed to strategically align the federal tax incentive with state and local economic development priorities.
What Should Investors Do Now?
Investors considering an Opportunity Zone strategy should begin with the real estate—not the tax incentive.
Start by identifying properties and markets that already demonstrate strong investment fundamentals. From there, determine whether the property is located within a current or potential Opportunity Zone and evaluate how the designation could affect the overall investment.
It is also important to work with qualified tax, legal and financial professionals before making an investment decision. Opportunity Zone rules can be complex, and eligibility requirements apply to both investors and the investments made through Qualified Opportunity Funds.
For property owners, understanding Opportunity Zones can also be valuable. A designation may increase the pool of potential investors interested in a property, particularly when a project aligns with redevelopment, job creation or other economic development objectives.
Looking Ahead
North Carolina’s Opportunity Zone program is evolving at an important time for commercial real estate. With new designations expected to take effect in 2027, investors and developers have an opportunity to better understand which communities may benefit from future investment incentives.
For commercial real estate professionals, the takeaway is simple: Opportunity Zones should be considered alongside market fundamentals, development potential and long-term investment strategy.
As North Carolina continues to grow, areas positioned for new investment, redevelopment and job creation could present compelling opportunities for investors looking beyond traditional real estate metrics.
For current information on North Carolina’s Opportunity Zone designations and the 2027 nomination process, visit the North Carolina Department of Commerce Opportunity Zones page and the North Carolina Opportunity Zones map.
This article is intended for educational purposes only and should not be considered tax, legal or investment advice. Investors should consult qualified professionals regarding their individual circumstances and Opportunity Zone eligibility.
If you are evaluating a property, a development site or an investment strategy that may involve a current or future Opportunity Zone, the SVN Raleigh team can help you weigh the designation alongside the market fundamentals that drive long-term value.
