Seizing Opportunities: Insight into Lancaster’s Growth & Opportunity Zones

As trusted brokerage professionals, our team always has its fingers on the pulse of the Southern California market. In recent years, the six different Qualified Opportunity Zones in Lancaster have captivated our attention. It’s a place where investors can benefit from reduced pricing and tax breaks in a burgeoning region where industry is already thriving.

A LOOK AT OPPORTUNITY ZONES

In general, Opportunity Zones offer investors the ability to delay payment of capital gains taxes and permanently exclude taxable income derived from capital gains through the sale or exchange of an investment. The aim is to stimulate economic growth and job availability in designated areas in exchange for granting temporary tax deferral on investors’ capital gains. Most of these regions are typically located near residential areas with a minimum of 30 neighboring businesses. There are thousands of Opportunity Zones across the United States including California.

CONSIDERING LANCASTER

Our team has seen a strong growth trajectory throughout Lancaster where six qualifying locations comprise 4,000 acres of redevelopment opportunities and vacant land. With that, we think it has the potential to become the next big industrial market in Southern California, especially for manufacturing-type businesses. Our perspective is based on several factors.

First, the area itself has a strong workforce of qualified people who are currently commuting out of town for job opportunities to places like Santa Clarita and Los Angeles. The continued growth of upper-middle-class residents has drawn numerous new retailers, restaurants, and professional service providers to cater to the desires and requirements of these consumers.

Second, the value on properties there is significant compared to other areas like Santa Clarita and North Hollywood where a NNN building might sell for $1.35 to $1.75 per sf. Depending on the building, Lancaster falls within the $0.85 to $1.10 range, which is a substantial discount especially when you are talking about a 5,000-sf building — this could save you millions of dollars.

Many businesses have already moved into the area such as Trader Joe’s, which is currently constructing a storage and distribution center on a million sf that will bring hundreds of jobs to the area. BYD Bus is also expanding its manufacturing to Lancaster, where it will continue to produce battery-electric buses. The aviation and aerospace industries also already have strongholds in the area: Boeing, Northrop Grumman, and Lockheed Martin all have a significant presence in the Antelope Valley as do many of their suppliers and subcontractors.

A RECENT 1031 EXCHANGE

Earlier this year, a GM Properties client with capital gains approached our team to express interest in investing in an Opportunity Zone. Passionate about pharmaceutical and biotech, the client was a good fit for Lancaster area where these industries have the potential flourish. After consulting with GM Properties, the client purchased three properties in one of Lancaster’s Opportunity Zones to perform a 1031 exchange.

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For inquiries about Opportunity Zones and 1031 exchanges, contact our Brokerage team.