On September 10, AKA United Nations, an extended-stay hotel-condominium in Midtown Manhattan, started receiving guests. This is the first building in New York City whose costs were partly financed via crowd funding, with $12 million of the building’s $95 million purchase and renovation costs being raised from 116 online pledges of at least $20,000 each, according to BloombergBusiness.
In 2012, President Obama signed the JOBs Act (the acronym stands for “Jumpstart Our Business Startups”), which loosened securities laws to allow crowdfunding platforms, and cleared the way for companies to accept pledges from up to 500 unaccredited investors. Times Realty News lists 152 crowdfunding websites in the U.S., although Bloomberg reports most of these are vying to finance modest buildings in smaller cities.
Still, the research firm Massolution estimates that crowdfunding for commercial real estate could double to $2.57 billion this year. One of the more prominent crowdfunding activists is Prodigy Network, which renovated AKA United Nations with partners. About 90% of the money it raised for this project came from investors outside of the U.S.
Prodigy Network’s highest profile crowdfunded project to date is BD Bacatá, a 67-story, 364-room hotel in Bogata, Colombia. By the time construction started in 2013, Prodigy had raised more than $170 million from 3,800 investors to build what will be Colombia’s tallest structure. This week, the last floors of the tower are being put into place.
This was the world’s first crowdfunded skyscraper. Each of the investors in BD Bacatá owns equity shares in the project, and some have already received returns exceeding 40% of their stakes.
Prodigy currently has three other crowdfunded projects underway in New York City, including The Assemblage, a 12-story existing building on 25th Street, for which Prodigy is trying to raise $15 million. The projected IRR on a minimum investment of $20,000 is between 10% and 12%. Prodigy already has fully funded a $38 million redevelopment of another building on John Street in Mnahattan, for which the projected IRR is 15% to 17%.
Prodigy’s campaign “shows the real estate industry that crowdfunding isn’t just a theoretical model,” Ben Miller, co-founder of Fundrise.com, a competing site, tells Bloomberg. Fundrise in January sold interests in bonds backing 3 World Trade Center, an 80-story skyscraper under construction in lower Manhattan, for as little as $5,000. Miller says the effort raised $5 million, in spite of resistance from investment banks that originated the bonds.
Related Stories
| Mar 11, 2011
Chicago office building will serve tenants and historic church
The Alter Group is partnering with White Oak Realty Partners to develop a 490,000-sf high-performance office building in Chicago’s West Loop. The tower will be located on land owned by Old St. Patrick’s Church (a neighborhood landmark that survived the Chicago Fire of 1871) that’s currently being used as a parking lot.
| Mar 9, 2011
Winners of the 2011 eVolo Skyscraper Competition
Winners of the eVolo 2011 Skyscraper Competition include a high-rise recycling center in New Delhi, India, a dome-like horizontal skyscraper in France that harvests solar energy and collects rainwater, and the Hoover Dam reimagined as an inhabitable skyscraper.
| Mar 2, 2011
How skyscrapers can save the city
Besides making cities more affordable and architecturally interesting, tall buildings are greener than sprawl, and they foster social capital and creativity. Yet some urban planners and preservationists seem to have a misplaced fear of heights that yields damaging restrictions on how tall a building can be. From New York to Paris to Mumbai, there’s a powerful case for building up, not out.
| Feb 11, 2011
Chicago high-rise mixes condos with classrooms for Art Institute students
The Legacy at Millennium Park is a 72-story, mixed-use complex that rises high above Chicago’s Michigan Avenue. The glass tower, designed by Solomon Cordwell Buenz, is mostly residential, but also includes 41,000 sf of classroom space for the School of the Art Institute of Chicago and another 7,400 sf of retail space. The building’s 355 one-, two-, three-, and four-bedroom condominiums range from 875 sf to 9,300 sf, and there are seven levels of parking. Sky patios on the 15th, 42nd, and 60th floors give owners outdoor access and views of Lake Michigan.
| Feb 11, 2011
Chicago architecture firm planning one of China’s tallest towers
Chicago-based Goettsch Partners was commissioned by developer Guangzhou R&F Properties Co. Ltd. to design a new 294,570-sm mixed-use tower in Tianjin, China. The Tianjin R&F Guangdong Tower will be located within the city’s newly planned business district, and at 439 meters it will be one of China’s tallest buildings. The massive complex will feature 134,900 sm of Class A office space, a 400-key, five-star hotel, 55 condominiums, and 8,550 sm of retail space. The architects are designing the tower with multi-story atriums and a high-performance curtain wall to bring daylight deep into the building, thereby creating deeper lease spans. The project is currently finishing design.
| Dec 17, 2010
Condominium and retail building offers luxury and elegance
The 58-story Austonian in Austin, Texas, is the tallest residential building in the western U.S. Benchmark Development, along with Ziegler Cooper Architects and Balfour Beatty (GC), created the 850,000-sf tower with 178 residences, retail space, a 6,000-sf fitness center, and a 10th-floor outdoor area with a 75-foot saltwater lap pool and spa, private cabanas, outdoor kitchens, and pet exercise and grooming areas.
| Dec 17, 2010
Luxury condos built for privacy
A new luxury condominium tower in Los Angeles, The Carlyle has 24 floors with 78 units. Each of the four units on each floor has a private elevator foyer. The top three floors house six 5,000-sf penthouses that offer residents both indoor and outdoor living space. KMD Architects designed the 310,000-sf structure, and Elad Properties was project developer.
| Dec 17, 2010
Vietnam business center will combine office and residential space
The 300,000-sm VietinBank Business Center in Hanoi, Vietnam, designed by Foster + Partners, will have two commercial towers: the first, a 68-story, 362-meter office tower for the international headquarters of VietinBank; the second, a five-star hotel, spa, and serviced apartments. A seven-story podium with conference facilities, retail space, restaurants, and rooftop garden will connect the two towers. Eco-friendly features include using recycled heat from the center’s power plant to provide hot water, and installing water features and plants to improve indoor air quality. Turner Construction Co. is the general contractor.
| Nov 16, 2010
CityCenter’s new Harmon Hotel targeted for demolition
MGM Resorts officials want to demolish the unopened 27-story Harmon Hotel—one of the main components of its brand new $8.5 billion CityCenter development in Las Vegas. In 2008, inspectors found structural work on the Harmon didn’t match building plans submitted to the county, with construction issues focused on improperly placed steel reinforcing bar. In January 2009, MGM scrapped the building’s 200 condo units on the upper floors and stopped the tower at 27 stories, focusing on the Harmon having just 400 hotel rooms. With the Lord Norman Foster-designed building mired in litigation, construction has since been halted on the interior, and the blue-glass tower is essentially a 27-story empty shell.
| Nov 3, 2010
Rotating atriums give Riyadh’s first Hilton an unusual twist
Goettsch Partners, in collaboration with Omrania & Associates (architect of record) and David Wrenn Interiors (interior designer), is serving as design architect for the five-star, 900-key Hilton Riyadh.
