Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1367

Want further evidence that technology and the internet are going to dramatically transform many “non-tech” industries  such as real estate? 

Take a look at 1351 H Street NE in Washington D.C (pictured above). It houses a hybrid retail store and restaurant and is probably the first truly crowdfunded real estate project .

The project was completed using a platform called Fundrise , which I’ve written about before here on Architect This City. Their vision is to completely democratize real estate investment by removing middlepeople and outdated regulations that restrict who and how people can invest in real estate.

To accomplish this, the founders of Fundrise went out in 2011 and bought the building located at 1351 H Street NE for $825,000. The goal was for it to act as their proof of concept. 

They then spent a significant amount of time and money figuring out how to make it legal for small and local investors to participate in the project (as opposed to just accredited investors ). It was ultimately done through a “local public offering” filed with the SEC.

So how does it work?

In the case of 1351 H Street NE, they first went out to the local community and asked them what they wanted to see . That’s how they ended up with a unique retail store / restaurant. It’s what the community wanted.

Once this was established, they went out and issued 3,250 shares and crowdfunded $325,000 from 175 local investors . This was for an ownership share in both the building and the future business. The average investment amount was $2,000, but people were able to invest as little as $100.

This is an incredible accomplishment. It takes real estate investment and development to a local level and really empowers small entrepreneurs to start businesses that may have been previously unfundable by traditional sources.

I don’t know what you think, but I think this is the beginning of a powerful transformation. Many of the structures that are currently in place were formed at a time when it wouldn’t have been practical to crowdsource ideas and crowdfund money. But now that is very possible. It was just done.

Image: Maketto  

Ace Hotel, LA by Dan Hogman on 500px

https://500px.com/embed.js

The word on the street right now is that Ace Hotel will be opening up a location in Toronto’s Fashion District at 51 Camden Street . 

Unlike its other outposts around the world, which entailed the renovation of a historic building, this one will be a new build. And according to HotelChatter , Shim-Sutcliffe Architects have been retained for the project.

Already a demolition permit has been issued for the existing 3 storey office building:

For those of you who may not be familiar with the Ace Hotel brand, the first hotel opened in Portland in 1999 when 3 friends transformed a halfway house into an affordable hotel for creative types. 

Since then, the hotel has expanded to New York, Los Angeles, Seattle, Palm Springs, as well as many other cities, and has become a kind of cultural institution for the creative class.

I’m excited that they have (allegedly) picked Toronto for their next property and I’m excited that Shim-Sutcliffe will be (supposedly) designing it.

Image Source:  Vancouver by Marc M on 500px

According to a recent Bloomberg article , this is where the rich are putting their money today:

“The two greatest stores of wealth internationally today is contemporary art….. and I don’t mean that as a joke, I mean that as a serious asset class,” said Fink . “And two, the other store of wealth today is apartments in Manhattan, apartments in Vancouver, in London.”

In case you wondering, Laurence Fink is the founder and CEO of BlackRock Inc. , which today is the largest asset manager in the world. They have over $4.77 trillion in assets under management according to their website . That’s a mind boggling number.

And if you read the Bloomberg article cited above, you’ll see that this interest in both art and apartments represents a shift away from gold as the de facto safe haven.

“Historically gold was a great instrument for storing of wealth,” the chairman of BlackRock Inc. said at a conference in Singapore on Tuesday. “Gold has lost its luster and there’s other mechanisms in which you can store wealth that are inflation-adjusted.”

What’s interesting and probably most relevant to the Architect This City community though is this investment focus on apartments.

When people talk about a possible housing bubble in Canada they often cite house prices to median household income as a key ratio. The question then becomes: How can house prices be such a high multiple relative to local incomes?

That’s relevant, but it’s not the entire story for cities like New York, London, and Vancouver. That ratio alone assumes that real estate isn’t a global investment vehicle. And for some people people it is exactly that.