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 | Aug 7, 2015
Tribute tower to cricket world champs will be Sri Lanka’s tallest
The 1996 Iconic Tower will be a tribute to the country’s cricket team, which won the World Cup in 1996.
Vertical Transportation | Aug 5, 2015
ThyssenKrupp’s maglev elevator test tower almost ready
The 761-foot concrete tower will enable the manufacturer to test its maglev elevator prototypes. The new elevators will be moved by magnets, allowing for vertical and horizontal movement of multiple cars in one shaft.
High-rise Construction | Aug 4, 2015
Construction of Vietnam’s tallest building commences in Ho Chi Minh City
A 1,509-foot skyscraper broke ground on the banks of the Saigon River in Ho Chi Minh City, Vietnam.
High-rise Construction | Jul 29, 2015
Jerusalem to get a high-rise pyramid by Daniel Libeskind
Are pyramids making a comeback? The city of Paris recently approved a triangle-shaped building that stirred controversy from residents. Now, the city of Jerusalem gave Libeskind's pyramid tower the go-ahead.
High-rise Construction | Jul 28, 2015
Work begins on KPF's 'flared silhouette' tower in Manhattan
The 62-story, 157-unit luxury condo tower widens at the 40th floor, resulting in a gently flared silhouette, accented by a sculpted crown.
Codes and Standards | Jul 27, 2015
New York City changing zoning rules to reduce shadows cast by high rises
For decades, the New York City’s zoning rules have made it hard to construct high-rise buildings that seem airy and minimize the shadows they cast. The city planning department is now working to change that.
High-rise Construction | Jul 20, 2015
Morphosis' Casablanca Finance City tower to be topped with crown-shaped pinnacle
The tower will anchor a new business district being planned, similar to the glass and concrete business La Défense section at the outskirts of Paris.
High-rise Construction | Jul 15, 2015
Pelli Clarke Pelli's Wolf Point tower would be Chicago's fifth-tallest
Updated renderings from César Pelli's firm show a taller, slimmer design, possibly exceeding 1,000 feet.
High-rise Construction | Jul 15, 2015
Landmark status could delay Hancock Center renovations
Chicago officials have started to marshal documents to protect the tower against planned architectural changes.
High-rise Construction | Jul 13, 2015
Herzog & de Meuron’s triangle tower stirs controversy in Paris
The 590-foot glass pyramid building will include a 120-room hotel, 754,000 sf of office space, and cultural facilities.
