Opportunity zones: Impactful investing

Through the federal Qualified Opportunity Zone (QOZ) program, Clarion utilizes tax-advantaged real estate investing to spur growth in economically underserved areas across the U.S.

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"Clarion Partners has over 40 years of market knowledge and institutional-quality focus in industrial warehouse and housing investments. These sectors can most benefit communities located in opportunity zones."

— Jason Glasser, Managing Director & Portfolio Manager

Opportunity zone FAQs

WHAT IS THE QOZ PROGRAM?

A community development program established by the federal government via the Tax Cuts and Jobs Act (2017) and extended via the One Big Beautiful Bill Act (2025) that provides investors potential tax benefits to encourage long-term private sector investments in lower-income communities. The upcoming QOZ 2.0 program will take effect in January 2027 for new investments.

Read more about key QOZ 2.0 updates

Click here for a map of Opportunity Zones

WHAT ARE THE TAX BENEFITS OF A QOZ INVESTMENT?

1. Deferral of capital gains on prior asset sale for five years
2. 10% step-up in basis on prior capital gain
3. Shielding of rental income using depreciation1
4. Elimination of capital gains tax on QOZ investments sold after 10-year holding period

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WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR QOZ INVESTORS?

Eligible capital gains must be invested within 180 days of the sale that generated the gain; some exceptions may apply.2 Short-term or long-term capital gains can be used from the sale of virtually any asset class.

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1 Subject to certain limitations.
2 Additional flexibility on redeployment timing for certain types of gains. Please consult with your tax advisor.

WHAT ARE THE REQUIREMENTS FOR A QOZ INVESTMENT MANAGER?

In order for an underlying investment to qualify, it must meet certain requirements, including:
• Substantially improve properties (development/redevelopment) or place properties into service as first user
• Maintain long-term investments in QOZs
• Meet semi-annual testing requirements
• Complete mandatory transparency and reporting requirements

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TRADITIONAL VS. RURAL QOZS: WHAT ARE THE DIFFERENCES?

Traditional opportunity zones align more closely with classic real estate fundamentals, while rural QOZs are designed to offer enhanced tax incentives to counterbalance the potential additional risk.

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HOW IS CLARION POSITIONED TO INVEST IN QOZs?

Clarion has decades of experience creating value through real estate development. We are currently invested in 169 properties in areas designated as QOZs. Additionally, we own and operate 732 properties in submarkets neighboring QOZs across the U.S.

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Opportunity zone map

There are over 8,700 designated Qualified Opportunity Zones dispersed across all 50 states, and every major city has at least one Opportunity Zone.

Map provided by U.S. Department of Housing and Urban Development


 
 

Case study


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Eligibility requirements for QOZ investors


Timing 

TIMING

Eligible capital gains (short-term or long-term) generally must be invested within 180 days of realization (or in certain circumstances within 180 days of fiscal year end or tax return due date); special rules apply to gains realized through entities and for "Section 1231 gains" 3


Structuring 

STRUCTURING

Eligible capital gains must be invested in a QOZ investment vehicle for the purpose of investing in eligible properties located in designated QOZs. Most QOZ investment vehicles do not invest in qualifying property directly, but do so through a subsidiary entity.

 
 


 

Investor realizes capital gains



 
 

180 days

Investment Date 
Investor invests eligible proceeds within 180 days,
deferring associated tax liability


 
 

5 years after investment date

10% Step-up in basis
Deferred tax liability on original capital gain
recognized by investor

 
 

10 years after investment date

Eligibility to sell investment
When investments are sold, investor's cost basis
stepped up to fair market value, eliminating tax
liabilities on potential capital gains from QOZ investment


3 Investors should consult with a tax advisor to determine whether an amount they may invest is eligible capital gains. Additional flexibility on redeployment timing for certain types of gains. Please consult with your tax advisor. Past performance is not indicative of future results. Please see the important disclosures at the bottom of this webpage.

Potential tax benefits of a QOZ investment


Defer


DEFER*

Federal tax liability on eligible capital gains in a QOZ investment for five years


Reduce


REDUCE*

Tax with 10% basis step-up on prior capital gain


Shield


SHIELD*

Taxable income using depreciation to offset4; if held for 10+ years, the depreciation recapture tax is eliminated at asset sale


Debt financing icon


ELIMINATE*

Federal tax liability on potential capital gains from a QOZ investment if held for 10+ years


* Investors should consult with a tax advisor to determine whether an investment in a QOZ would be eligible for these benefits. The above refers to federal tax benefits; deferral of state tax subject to state tax laws. An Investment is speculative and involves substantial risks and conflicts of interest. Past performance is not indicative of future results and incomes may change more rapidly and significantly than under standard market conditions. For details on potential benefits for the upcoming QOZ program under the OBBBA, click here.

4 Subject to special rules and limitations.

 
 

Press Release


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Requirements for a QOZ investment manager


Targeted Investments 

TARGETED INVESTMENTS

A QOZ investment must have 90% of its assets in QOZ properties or in subsidiary entities that qualify as Qualified Opportunity Zone Businesses (QOZBs)5




Community Improvement 

COMMUNITY IMPROVEMENT

Each QOZ investment must include new development or "substantial improvement"; for repositioning projects, the renovation costs must be greater than the purchase price allocable to the building (excl. land)


Mandatory Transparency & Reporting 

MANDATORY TRANSPARENCY & REPORTING

Each QOZ investment manager must report:
- Value of assets
- Number of residential units
- Average monthly full-time employees or other indication of employment impact

5 QOZBs are subject to a 70% test. QOZBs are also very limited in the liquid financial asset they are allowed to hold, subject to reasonable working capital rules.

Clarion: In the zones6

Clarion has deep experience investing in and around designated QOZs.

Industrial 

Industrial

In a QOZ: 123

Within 3 miles of a QOZ: 415

Multifamily 

Apartment

In a QOZ: 19

Within 3 miles of a QOZ: 124

Other 

Other

In a QOZ: 27

Within 3 miles of a QOZ: 193

Total Properties 

Total Properties

In a QOZ: 169

Within 3 miles of a QOZ: 732

6 As of December 31, 2025; based on Clarion's portion of asset ownership. Exclusive of property investments in Europe. Unless otherwise indicated, all asset values are based on Gross Real Estate Value (GRE).

Image of an unfinished residential multifamily building with a construction crane  
 

Development is in our DNA

  • ~56% of our current AUM was initiated as a redevelopment or ground-up development project
  • We have developed 125 million square feet across all property types, with a considerable percentage in industrial, over the past ten years

  • Thumbnail photo of animated opportunity zone diagram
    What is an Opportunity Zone?
    What is an Opportunity Zone?
    Video
    ;#QOZ 1;#
    11.21.2025
    What are qualified opportunity zones and how do they work? Learn about the potential benefits of opportunity zone real estate in this video.
    /insights/what-is-an-opportunity-zone

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Investment in real estate is speculative and involves significant risk. For more information about certain of the material risks and limitations associated with Clarion Partners’ investment advisory products, strategies and services, please see Clarion’s current Form ADV Part 2A brochure, which is available on the SEC’s Investment Adviser Public Disclosure website at https://adviserinfo.sec.gov/firm/summary/108803. Investors should consider their investment objectives, and it is strongly suggested that the reader seek his or her own independent advice in relation to any investment, financial, legal, tax, accounting or regulatory risks and evaluate their own risk tolerance before investing.

This material does not constitute investment advice, nor does it constitute an offer in any product or strategy offered by Clarion Partners LLC or Clarion Partners Europe, and should not be viewed as a current or past recommendation to buy or sell any securities. Any specific investment referenced may or may not be held in a Clarion Partners client account. It should not be assumed that any investment, in any property or other asset, was or will be profitable.

All Clarion Partners LLC and Clarion Partners Europe statistics, data and charts, including but not limited to assets under management (AUM), ESG data, sector data and property data, as well as data related to our investors, tenants and employees, are as of March 31, 2026 unless otherwise noted.

Photos used in this website were selected based on visual appearance, are used for illustrative purposes only, and are not necessarily reflective of all the investments in a Clarion fund or portfolio or the investments a Clarion fund or portfolio will make in the future.

Investment in real estate is speculative and involves significant risk. For more information about certain of the material risks and limitations associated with Clarion Partners’ investment advisory products, strategies and services, please see Clarion’s current Form ADV Part 2A brochure, which is available on the SEC’s Investment Adviser Public Disclosure website at https://adviserinfo.sec.gov/firm/summary/108803.

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