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
High-rise Construction | May 23, 2017
Goettsch Partners to design three-building Optics Valley Center complex
The Chicago-based firm won a design competition to design the complex located in Wuhan, China.
High-rise Construction | May 15, 2017
Construction begins on 47-story luxury tower in Chicago’s South Loop
The glass tower is being built at 1326 S. Michigan Avenue.
High-rise Construction | Apr 26, 2017
Dubai’s newest building is a giant gilded picture frame
Despite currently being under construction, the building is the center of an ongoing lawsuit filed by the architect.
3D Printing | Apr 17, 2017
The Tokyo Pod Vending Machine resembles a giant game of Tetris in the sky
The building is designed to print and dispense its own dwellings in vending machine-obsessed Tokyo.
Green | Apr 11, 2017
Passivhaus for high-rises? Research demonstrates viability of the stringent standards for tall residential buildings
A new study conducted by FXFOWLE shows that Building Teams can meet stringent Passivhaus performance standards with minimal impact to first cost and aesthetics.
Mixed-Use | Apr 5, 2017
SOM-designed ‘vertical village’ is Thailand’s largest private-sector development ever
60,000 people will live and work in One Bangkok when it is completed in 2025.
High-rise Construction | Apr 4, 2017
Fifth tallest tower in the world opens in Seoul with the world’s highest glass-bottomed observation deck
Lotte World Tower’s glass-bottomed observation deck allows visitors to stand 1,640 feet above ground and look straight down.
High-rise Construction | Mar 31, 2017
Ping An Finance Center officially becomes the fourth tallest building in the world
The completed building sits between the Makkah Royal Clock Tower at 1,972 feet and One World Trade Center at 1,776 feet.
High-rise Construction | Mar 27, 2017
Density and tall buildings
CRTKL’s Maren Striker examines Europe’s desire to build upward.
High-rise Construction | Mar 23, 2017
This speculative skyscraper would be suspended from an orbiting asteroid
Clouds Architecture, a New York-based architecture firm, has created a design to invert a skyscraper’s traditional earth-based foundation and replace it with a space-based supporting foundation from which the tower is suspended.
