Qualified Opportunity Zones - conferring tax breaks for investment into areas needing economic development - are drawing interest from family offices and other wealth management groups. Here's an example of what's happening on the ground.

Qualified Opportunity Zones may not be the most eye-catching or politically controversial parts of the 2017 tax package that President Donald Trump signed, but they’re causing a stir in parts of wealth management. 

The federal government’s Tax Cuts and Jobs Act of 2017 established the zones to stimulate economic development. These areas confer tax benefits to investors who re-invest capital gains into long-term investments in QOZs.

As previously reported, US wealth firm Cresset, which has built a family office as part of its offerings, has also pushed into the QOZ space, an area that in some respects mirrors the trend of impact investing that has caused a good deal of debate and some action in recent years. (To see a feature exploring how the zones, as well as structures such as municipal bonds, can be seen as impact investment channels, click here.)

Recently, the Cresset-Diversified QOZ Fund announced that it has formed a joint venture with Hines, the commercial real estate development firm, to develop The Preston, a new residential building in downtown Houston, Texas. The project will be an AA+ residential building with 373 apartments and 6,804 square feet of street-level retail. 

“The Preston is the first of many great opportunities the Cresset-Diversified QOZ Fund is pursuing. It represents a top-quality real estate property in one of the fastest growing urban areas in the United States with a leading developer in Hines,” Avy Stein, co-founder of Cresset, said. 

“We have a long-term relationship with Hines and look forward to pursuing many more QOZ opportunities together,” Larry Levy of Diversified Real Estate Capital, said. 

The Cresset-Diversified QOZ Fund seeks to generate returns enhanced by potential tax benefits, including deferral and reduction.