Why This Opportunity Zone Investor Sees the Best Returns in Retail

Orange County-based investment firm Primior is focusing on retail assets in opportunity zone markets. Retail, according to the firm’s founder and CEO Johnney Zhang, offer the best returns in these markets. Earlier this year, Primior launched two opportunity zone funds and already has two retail centers in pre-construction phases. Looking ahead, it will continue to focus on retail projects in these markets.

“The returns are above average because of the higher rent that our corporate tenants are paying,” Zhang tells GlobeSt.com. “We are currently working on more acquisitions in opportunity zones. Our strategy is simple. It is not to create a blind fund for investing in multiple projects that have not even been identified, with the fund having only 180 days to deploy the capital or fail the six-month test. We concentrate on finding projects  first and then creating a qualified opportunity zone fund for them. That way, our investors can see the project they invest in, and we don’t have to worry about the six-month test.”

The company is building two retail centers in Santa Ana. Both assets are anchored by Chase Bank with 10-year leases signed, and they are both entitled and ready to start construction very soon, according to Zhang. Both of these assets are funded by the firm’s two funds.

While retail assets offer healthy returns, Zhang says that the company’s integrated model helps to bring down costs and create efficiency that drives returns. “We are vertically integrated, which allows us to be more efficient during the development process,” he says. “And since all the core team members are working in the same office, communication is much better than when you work with 10 different outside consultants and need, for example, to coordinate times for conference calls which could take days. We have in-house architects, contractors, leasing specialists, marketing experts, property managers and investment bankers. These teams handle all aspects of development and work very closely with each other. The end result has been amazing in terms of saving time as well as reducing costs, which leads to much higher returns.”

Primior has long been an innovator in the commercial real estate industry, and its entry in to opportunity zones and focus on retail invest is no different. “We entered the U.S. market in 2011, when it was still at bottom after the 2007 crisis,” says Zhang. “It had started to recover, but prices were still very attractive. The European market was in a very bad shape, and we didn’t see any sign of recovery anytime soon. The China market was at its peak, so we stayed away from it.”

➤➤ Join the GlobeSt.com ADAPT: Opportunity Zones conference September 16-17 in Baltimore, MD The new national conference series is aimed at identifying Opportunity Zones across all property types and geographic regions. This first-of-its-kind event will educate, connect and celebrate the investors, developers and owners with the people behind the planning and decision-making, such as architects, consultants, academics and, most importantly, municipal officials. Also, be sure to take a look at our current adaptive reuse and opportunity zone nomination form and submit your project! Deadline is fast approaching June 7th.

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