Former Bloomberg Official and Current RXR VP Discusses Opportunity Zones, Infrastructure, and Transit-Oriented Developments
As an executive VP at RXR Realty, Seth Pinsky focuses on investment in emerging opportunities in New York City and the surrounding region. These opportunities were also a focus of his previous work in the Bloomberg administration. It came as no surprise, therefore, that Pinsky had much to say about the new Opportunity Zone program. During a keynote speech at the Global Leaders in Real Estate Summit, he offered his perspectives on the program and his predictions for its future.
Ken Weissenberg, EisnerAmper partner, interviewed Pinsky. iGlobal Forum in partnership with EisnerAmper hosted the event, which was held in October at the Sofitel New York.
During the lively conversation, Weissenberg asked if the Opportunity Zone designation will increase RXR’s ability to get some of its infrastructure projects and transit-oriented developments off the ground. Pinsky’s answer: an unqualified yes! He explained that RXR has been exploring projects in several of the communities encompassed by the program, and that these projects will now become more viable.
Furthermore, Pinsky noted that in the past, it was difficult to attract capital to these communities. “Now, suddenly, you have this wave of capital that is specifically targeting these areas.” He added that RXR is getting calls daily from institutional investors who initially shied away from places like Yonkers, New Rochelle and Glen Cove.
RXR is in an especially enviable position because its projects in the Opportunity Zones are shovel-ready. As Pinsky pointed out, “The longer it takes for you to get into the ground, the shorter your deferral period is, and the less likely that you’ll get to the full 15% [discount on the capital gains].”
Several of the RXR projects in question are transit-oriented developments, a specialty of the firm. These developments address the need for suburbs to create walkable, transit-oriented downtowns to attract both young people and aging Baby Boomers. “More and more communities are coming to the realization that the old model just doesn’t work,” Pinsky commented. “The beauty of a downtown development, especially at even moderate density, is that you can create a sea change in the conditions of these municipalities on a very small percentage of the total land area.”
How have buyers and sellers responded to the Opportunity Zones? Pinsky has observed a little bit of a mismatch between what sellers believe their land is now worth and what buyers are willing to pay. He doesn’t expect the gold rush mentality of the exploration period to last for long, though. His prediction: “You’re going to see one or two projects that are going to hit grand slam home runs, and then we’ll say, ‘Oh, that’s the model.’ And then we’ll be off to the races.”