Real Estate Awaits a Return to Normalcy; Focuses on Tenants, Not Valuations
Mar 04,2021
If the real estate industry has learned anything from the economic cycles of the past three decades and from crises like the savings and loan collapse, it’s patience. On the surface, the global pandemic seems to have had a uniform impact on the global economy—the tendency is to look at the big picture impact on national economies, job losses and stock markets. While there is no arguing that the effects of this singular event in modern history will be felt—and studied—for years to come, the devil is in the details. Those who own real estate assets across sectors and around the country see varying realities: Some industries, like restaurants, are harder hit than others. Yet within the restaurants industry itself there is variation: Many quick-serve and fast-food concepts are thriving, while others, like fine dining, are struggling. For the real estate industry, lessons learned from past cycles and crises are...
Has the Pandemic Permanently Altered Office Space?
Oct 09,2020
Smith & Howard would like to thank Ryanne Pennington of Jones Lang LaSalle and Chris Schoen of Greenstone Properties for participating in this article and sharing their insights with us.   There is no doubt that the COVID-19 pandemic has significantly affected office real estate around the country. As businesses begin welcoming their employees back to the office, many of those spaces remain sparsely occupied. Will that trend continue in 2021 and beyond? Smith & Howard spoke with two industry experts to get their perspective on the current office real estate environment and what they anticipate in the office market of the future. Demand for space in the current environment Most people do not believe the full corporate office is a thing of the past. It has, however, undergone a dramatic change and will continue to evolve in the coming years. One fallout from this trend is likely to be...
Several Tax Deadlines for Qualified Opportunity Funds Extended
Jun 08,2020
As a result of the COVID-19 pandemic, the Internal Revenue Service (IRS) recently extended several deadlines. Taxpayers who have invested in qualified opportunity funds should take note of the following changes. 180-Day Investment Period Taxpayers are generally expected to reinvest any capital gains they make from a qualified opportunity fund (QOF)  within 180 days of realizing that gain from a sale or exchange. According to IRS guidance 2020-39, if the last day of the 180-day investment period falls on or after April 1, 2020 and before December 31, 2020, the new last day of the investment period will now be December 31, 2020. 90-Percent Investment Standard If a QOF fails to hold 90 percent of its asset in a qualified opportunity zone property on any semi-annual testing date that falls between April 1, 2020 and December 31, 2020, the guidance provides that this failure is due to reasonable cause because...
CARES Act Introduced Tax Changes that Benefit Real Estate Businesses
Jun 02,2020
To help businesses deal with the financial fallout caused by the COVID-19 pandemic, several changes in tax incentives have been implemented by Congress and the federal government. This article identifies those changes so that real estate businesses can act on them in time to meet the extended tax filing deadlines. Of significance for real estate companies are certain modifications brought about by the Coronavirus Aid, Relief and Economic Security (CARES) Act, which was signed into law on March 27, 2020. Qualified Improvement Property One of the items of relevance is a correction (the so-called “Retail Glitch”) to the Tax Cuts and Jobs Act of 2017 (TCJA), changing the depreciation period for qualified improvement property (QIP) from 39 years to 15 years and allowing for accelerated bonus depreciation, currently at 100% of qualified cost. This concept generally includes improvements made by the taxpayer to the interior of a nonresidential building after...
Leveraging the Investment Potential of Qualified Opportunity Funds – An Update
Feb 27,2020
A provision of the 2017 Tax Cuts and Jobs Act was the Investing in Opportunity Act, which allowed for the creation of Qualified Opportunity Funds (QOFs). In June 2019, the Atlanta Business Chronicle reported that the city had seen a flurry of activity in some of Atlanta's 26 Opportunity Zones, including in  the historic Fairlie-Poplar neighborhood and the West End Mall. Curbed Atlanta reported in January that the plan to develop the West End Mall into a mixed-use hub featuring offices, shops, eateries and homes has attracted investors and is moving forward. According to the real estate data service, Reonomy, since November 2017, 52 commercial and industrial properties have sold in Atlanta Opportunity Zones, funneling a total of $78 million in new capital to those areas. As we explained previously, this gave investors a possible triple tax break: temporary deferral of tax on capital gains if they are invested in QOFs; a...
Opportunity Zones, a Rare Opportunity for Investors Too
Aug 06,2019
Senator Tim Scott, one of the sponsors of the bill that created opportunity zone legislation recently issued a warning to investors about being mindful of the law’s purpose to revitalize under-served and low-income census tracts. The moderator of Bisnow’s Opportunity Zone Summit in June of 2019 asked Senator Scott to end his comments on a positive note. In doing so, he quipped “I’m positive that if the opportunity zone program isn’t benefiting the communities it’s meant for, I’ll kill the program.” Census tracts are small, relatively permanent statistical subdivisions of a country. According to the United States Census Bureau, census tracts average about 4,000 citizens. While we must keep an eye on making sure opportunity zone (OZ) legislation remains intact, there is good news about the potential for substantial tax benefits for investors anticipating a capital gain in the next several years. Federal Opportunity Zones exist in 18 states, including...
Economic Turbulence Ahead? Global REITs Confident They’ll Weather the Storm
Oct 15,2018
“What goes up, must come down.” That familiar refrain echoes in the back of economists’ mind every time the Dow soars to new record-breaking heights, a quasi-regular occurrence last year. After more than 70 record closes in 2017, the markets fell in early February and major indices posted their worst weekly declines in more than two years. REITs declined in tandem, with the FTSE Nareit All Equity REITs Index hitting its lowest level in 14 months. Steep declines were short-lived, and the market started posting gains within the week. While indexes bucked the downturn in the immediate term, the dip is expected to usher in a period of increased volatility to an uncharacteristically calm market. The culprit for the sudden drop? A culmination of economic factors stirred the pot with two core concerns bubbling to the surface: interest rates and inflation. Tax cuts, a plan for increased federal spending, and strong monthly wage growth...
Assessing Atlanta’s Growth, Meeting Atlantans’ Needs
Oct 15,2018
It’s not just temperatures and humidity that are high in Atlanta this summer. Optimism is soaring as well. Results of Smith & Howard’s annual survey of construction and real estate industries reflect confidence that Georgia markets will experience new or expanded growth over the next three years. A quick view of our crane-dotted skyline confirms this. "Two things they're not making more of are land and time," said Kells Carroll, Acquisitions Director for Sugar Creek Capital, a national leader in affordable housing investments and property management. “Rising construction costs are a big issue; materials - lumber, bricks, they’re all going up in price, coupled with a rising interest rate environment it all directly impacts the feasibility of affordable housing,” he said. Progress Within Reach The rising cost of construction and scarcity of available land are key reasons developers will pass higher costs along. And while the growth is exciting for...
Atlanta’s Upper Westside: Vibrant, Urban and Opportunistic
Aug 20,2018
Major new developments are happening in the northwest corner of Atlanta, an area that has been rebranded as “Atlanta’s Upper Westside.” Over the course of two years, developers have announced more than $1 billion worth of new developments – attracting the attention of retailers and residents. Where exactly is the Upper Westside? Developers consider the boundaries for the Upper Westside to be very fluid. According to Malloy Peterson, Senior Vice President, Development, for Selig Enterprises Inc., the Upper Westside is bordered by Huff Road on the south; I-75 on the east; Marietta Road to the west; and Bolton/Moores Mill roads on the North. Atlanta’s Upper Westside Community Improvement District (CID) mapped out their interpretation of Atlanta’s Upper Westside which is similar to Peterson’s boundaries. In the 19th century the area was coined as an industrial hub and still carries that same aesthetic appeal today. “If I could use three words...
Little Known Tax Change Prompting Big Buzz
Aug 15,2018
It's been almost eight months since the Tax Cuts and Jobs Act was signed into law. There's been no shortage of analysis about its downstream effects, but one of the bill's most important features has not received the attention it deserves. It's an opportunity to defer taxes, invest, and potentially reap new benefits that can bring fresh growth to some of our under-served communities. The Investing in Opportunity Act allows for the creation of "Qualified Opportunity Funds," or "QO-Funds" to serve as vehicles for unprecedented community revitalization through the deferral and potential exclusion of capital gains. "A lot of people aren't aware of this yet," said Chris Conrad, Senior Manager with Smith & Howard, "but we are starting to see some traction. People have a lot of questions and we want to help get them answers." Forbes calls this new provision of the tax code a "triple play tax break"...

Go back to Blog Home