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 | Jan 25, 2016
BIG unveils new renderings for NYC towers at 76 Eleventh Avenue
The twisty, asymmetrical condo complexes will have office space instead of a hotel.
Mixed-Use | Jan 25, 2016
SOM unveils renderings of dual-tower Manhattan West development
The five million-sf project includes two office towers, a residential tower, retail space, and a new public square.
High-rise Construction | Jan 13, 2016
With the completion of NY’s 432 Park Avenue, there are now 100 ‘supertall’ skyscrapers in the world
That makes it an even 100. With the completion of 432 Park Avenue in New York City, the number of so-called “supertall” buildings (buildings standing at least 300 meters tall) in the world has reached the century mark, according to the Council on Tall Buildings and Urban Habitat.
High-rise Construction | Jan 12, 2016
Luxury high-rise is Zaha Hadid’s first foray into South America
The Casa Atlantica is planned for Copacabana beach in Rio de Janeiro, Brazil.
High-rise Construction | Jan 12, 2016
Renzo Piano's curved glass tower planned for NY's Soho neighborhood
The 25-story tower is a residential building with 115 apartments and plenty of amenities.
High-rise Construction | Jan 11, 2016
World’s second-tallest building (for now) is completed in China
Shanghai Tower makes up a trio of supertall buildings in that city’s commercial district.
High-rise Construction | Jan 7, 2016
Zaha Hadid designs a tower of 'stacked vases' in Melbourne
The structure is supported by sets of curved columns that taper to four different base heights.
High-rise Construction | Jan 4, 2016
Top high-rise innovations of 2015
A crowdfunded skyscraper in Colombia and Jerusalem’s wild, pyramid-shaped tower are among the landmark projects featured in the Council on Tall Buildings and Urban Habitat’s annual yearend review.
High-rise Construction | Jan 4, 2016
Top tall building predictions for 2016
Jetpack-based firefighting, pixelated towers, and high-rise rentals are among the innovations and themes coming to the tall buildings market in 2016, according to the Council on Tall Buildings and Urban Habitat.
High-rise Construction | Jan 4, 2016
Amid high-rise office building boom, Boston grapples with corporate signage rules
City has few skyscrapers adorned with lit company names, logos.