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Can Indoor Farming Fulfill The Dream Of Opportunity Zones?

Opportunity zones and indoor farms are both new frontiers for investment, and one company is seeking to combine them.
· CRE,Development,Opportunity Zones,Investment
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Zale Tabakman has developed a concept for an indoor farm that grows greens, herbs and vegetables using modular construction, called Local Grown Salads. One LGS farm would be 15K SF and fabricated off-site almost entirely — even the HVAC system, often one of the costliest elements of construction. All the site needs is for the walls, floor and ceiling to be sealed and the water and power to be connected to the grid.

“It’s like installing a giant washing machine into a building,” Tabakman, who is based in Ontario, Canada, told Bisnow.

Tabakman estimates that without any delays, an LGS unit can be installed in two weeks, with its first harvest possible in 30 days, and each subsequent one 30 days after. Each plant produced will be certified organic, non-GMO and kosher (in order for greens to be kosher, they must never come into contact with insects). Each farm is estimated to cost $2.2M, require 15 to 20 workers and start producing income after 150 days.

Several companies have already introduced urban farming, particularly near some of the most in-demand urban markets such as New York and San Francisco. But whereas many of those farms are in sizable, purpose-built new industrial buildings, LGS has a much smaller capital requirement and can take space in older warehouses that are otherwise obsolete for any industrial use.

Because each LGS unit only requires a 15K SF pad with 14-foot clearance heights, Tabakman believes it is actually better suited to older warehouses than newer buildings with higher ceilings, saying “all that extra space would be wasted.” The model is, in a way, ideally suited as an opportunity zone investment.

To that end, Tabakman is working to launch a qualified opportunity fund called I95 OZF, focusing on the Northeast corridor, from Richmond, Virginia, up to Boston, where space is at a premium and the most dense population in the country has sky-high food needs.

Many of the opportunity zones in cities like Baltimore and Philadelphia that are in need of investment would consider fresh, local produce to be a godsend. Baltimore in particular is rolling out the welcome mat for opportunity zone investment.