Established by Congress in the Tax Cuts and Jobs Act of 2017, the Qualified Opportunity Zone (QOZ) program was created with the goal of directing long-term private capital into areas that have been deemed to be economically underserved. Through a series of tax incentives tied to investors’ capital gains, the QOZ program creates a significant financial incentive for real estate investors and business owners to develop projects and build new businesses within these designated communities. The QOZ program identified 8,766 opportunity zones across the U.S., including several in the Greater Nashville Metro Area. The positive economic tailwinds in the region, combined with the significant tax benefits offered to QOZ investors, make Nashville’s opportunity zones among the most attractive in the country.
The Tennessee Department of Economic & Community Development reports there are 176 census tracts across 75 individual counties in the state that are QOZs. A total of 31 QOZ tracts are located within the greater Nashville region alone which currently has a regional population of over 1.9 million and has been named one of the Top 10 metros in the U.S. for job growth. Additionally, 123,000 students are currently enrolled in 18 colleges and universities in the region and will soon be primed to enter this growing job market.*
The Urban Institute estimates that less than a quarter of Tennessee’s QOZ residents are aged 25 or higher with a bachelor’s degree. With QOZ’s drawing investments for mixed-use projects that included both office space for new businesses and residential, the multitude of students graduating in the workforce are more likely to find job prospects to keep them in the region and allow them to fuel the growth cycle spurred by these initial investments. Some of the growth impact of this sort in Nashville is quickly becoming evident, such as with Wedgewood Houston and its burgeoning creative community.
With an underlying artistic spirit and proximity to downtown Nashville, Wedgewood Houston, known locally as ‘WeHo,’ has emerged as an artistic hub for the area. Renovating spaces such as former warehouses, factories and garages, companies such as Apple Music, Soho House, Jackalope Brewery and other studios, restaurants, and galleries have found a home in this exciting neighborhood. The area itself is well positioned with local attractions surrounding a large expanse of public green space. All in all, Wedgewood Houston has become a destination for both work and play, something that investment through QOZs will continue to encourage.
In support of this, the Cresset-Diversified QOZ Fund has partnered with Hines, a privately owned global real estate investment firm, for the development of T3 Finery in Wedgewood Houston. T3 Finery is a mixed-use development of both residential and office space focused on maintaining the traditional look of the Wedgewood Houston area, while introducing modern amenities by harnessing the energy of industrial design alongside updated technology and the environmental sustainability benefits of the T3 Timber construction methods.
The Hines T3 Concept (Timber, Transit and Technology) was first introduced by Hines after a two-year global research effort focused on modern wood construction and provides a prototype for the use of mass timber in developments. The innovative T3 developments use structural material from a renewable resource. It takes just 15 minutes for U.S. and Canadian forests to grow the amount of wood used for T3 concepts, and only young trees are used rather than old growth, ultimately helping to sustain forests. The nationwide T3 program from Hines offers an environmentally friendly investment that isn’t increasing carbon footprint.
“Partnering with Hines on the development of T3 Finery has allowed the Cresset-Diversified QOZ Fund to invest not only in an attractive, growing neighborhood, but one with an environmentally friendly promise,” said Michael Miller, Senior Managing Director at Diversified Real Estate Capital. “With the conclusion of this building, 300,000-square-feet of office space will be available, in which some 2,000 individuals will find employment. With them will come all the benefits that cater to increased foot traffic and the needs of those individuals: new restaurants, nightlife, retail, and more, along with the new jobs that support those businesses.”