Designated "opportunity zones," where a new federal program aims to channel investor money using a series of tax incentives, are roughly similar to the rest of the U.S., and many were already experiencing significant levels of development, a study has found.

The program, created as part of the 2017 tax reform legislation, is intended to encourage investment in overlooked areas by offering investors various tax cuts and deferrals, which escalate as investments in the zones are held longer. Experts say the greatest benefits will be available to program participants who invest their money in qualifying projects, within the nearly 9,000 designated zones nationwide, before the end of 2019.

An analysis by data firm Real Capital Analytics found that development site acquisitions within the zones began surging in the fourth quarter of 2017, around the time the tax law was passed and well before details of the program were finalized. While investment in properties outside of opportunity zones has been flat through 2018, investment in opportunity zones has gained momentum throughout the year as more details of the program have emerged.

Real Capital Analytics said there is a "misperception" that opportunity zones "are all downtrodden areas that have been left out of the economic recovery." The firm noted that price trends in the zones have generally tracked the overall market, with the exception that they experienced slightly larger price drops during the last financial crisis and were slower to recover.

In Los Angeles and the outer boroughs of New York City, however, prices in opportunity zones have recently outperformed those outside of the zones. In Los Angeles, the outperformance became pronounced in 2018, while in the New York outer boroughs, prices in opportunity zones have outperformed those in other areas since before 2014.

Roughly 15% of all U.S. commercial development has already been occurring in opportunity zones, Real Capital Analytics found. While existing properties in the zones skew toward industrial uses, development has focused on hotel and apartment properties, which indicates that "many of these neighborhoods were already transitioning before the program," the firm said.

The makeup of existing property owners in opportunity zones is "only slightly different" from the rest of the country, with cross-border, institutional and real estate investment trust investors having slightly lower ownership in the zones, Real Capital Analytics said. Corporate users have a slightly higher rate of ownership in the zones, and the majority of properties are owned by private, largely local investors.

Because state governments designated their own opportunity zones, the distribution of the zones varies widely by market, Real Capital Analytics said. Roughly 40% of the commercial property volume in Portland, Ore., is in opportunity zones, as is more than 30% of the commercial property in the New York City outer boroughs. Other markets with high proportions designated as opportunity zones include Cleveland; Reno, Nev.; Salt Lake City; Indianapolis; Boulder, Colo.; and Stamford, Conn.

Nationally, the firm found, 43% of properties in opportunity zones qualify as "very walkable" or better, compared to 29% of properties outside the zones.