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Tag: real estate investment topics

  • CRE PropTech: How Will it be Affected by the Aftermath of COVID-19

    COVID-19 will forever change the landscape of CRE (Commercial Real Estate), especially for firms who are used to operating almost exclusively in a brick and mortar, office environment. The aftermath of COVID-19 will almost undoubtedly include more “smart” CRE. To put it another way, as software like Zoom has become a household name – whereas prior to COVID-19 it was largely known to the white-collar working class – you can expect firms to invest less in physical property. Consequently, the data shows that in every sector, at least in the short-term, PropTech investment has slowed down (Abuelsamid, Forbes).

    Intuitively, successful long-term investors tend to be heavily data driven, which has been a big reason for the slowdown in PropTech. Investors within the real estate sector are exercising caution with regards to their portfolios, as well as towards new deals for CRE projects. A great deal of this is attributed to the initial concept of this piece (which Forbes agrees with): corporations and startup firms alike are showing an increased interest in technology, which allowed them to work “smart” (i.e. Zoom) despite the pandemic (Abuelsamid, Forbes). With decreased overhead being a large incentive for startups and pressure from shareholders to cut costs being a large incentive for big corporations, many are realizing that the way they were forced to do business is perhaps a more efficient way than they were prior to the COVID-19 pandemic.

    With that being said, as we mentioned in a previous piece, PropTech is still a relatively new field to most investors. The CRE investing subsector of PropTech is even smaller, so there’s definitely still plenty of opportunity for successful PropTech investment vehicles. Even with the current data showing there’s slowed growth in the PropTech CRE subsector, that’s not to say you shouldn’t keep an eye out for solid investment opportunities, as they are still out there and can definitely be lucrative. This is the main reason you’ll typically find seasoned, experienced investors in the CRE PropTech space. There is opportunity for large returns, but it is definitely slim.

    In the longer-term, there’s no reason right now to believe firms will switch back to investment in more physical property, especially when that money can be spent on human capital. Therefore, if you’re interested in PropTech investment strategies, you should not expect to see consistent positive performance from PropTech CRE investments. On the other hand – while this subject deserves a complete discussion on its own – residential PropTech is definitely on the rise (Aramati, Forbes). With a major push coming from cloud technologies and digital transformation, there’s a lot more investment in “smart” residential real estate as opposed to commercial real estate. Generally speaking, investments in “smart” technology have gained a tremendous amount of traction and thereby very large returns for earlier stage investors. Again, as we discussed in a previous article regarding PropTech, technological advancement is the future and investors who are looking for the next Amazon or Google in the real estate market ought to look into residential PropTech options with a more favorable outlook than commercial PropTech.

  • CRE PropTech: How Will it be Affected by the Aftermath of COVID-19

    COVID-19 will forever change the landscape of CRE (Commercial Real Estate), especially for firms who are used to operating almost exclusively in a brick and mortar, office environment. The aftermath of COVID-19 will almost undoubtedly include more “smart” CRE. To put it another way, as software like Zoom has become a household name – whereas prior to COVID-19 it was largely known to the white-collar working class – you can expect firms to invest less in physical property. Consequently, the data shows that in every sector, at least in the short-term, PropTech investment has slowed down (Abuelsamid, Forbes).

    Intuitively, successful long-term investors tend to be heavily data driven, which has been a big reason for the slowdown in PropTech. Investors within the real estate sector are exercising caution with regards to their portfolios, as well as towards new deals for CRE projects. A great deal of this is attributed to the initial concept of this piece (which Forbes agrees with): corporations and startup firms alike are showing an increased interest in technology, which allowed them to work “smart” (i.e. Zoom) despite the pandemic (Abuelsamid, Forbes). With decreased overhead being a large incentive for startups and pressure from shareholders to cut costs being a large incentive for big corporations, many are realizing that the way they were forced to do business is perhaps a more efficient way than they were prior to the COVID-19 pandemic.

    With that being said, as we mentioned in a previous piece, PropTech is still a relatively new field to most investors. The CRE investing subsector of PropTech is even smaller, so there’s definitely still plenty of opportunity for successful PropTech investment vehicles. Even with the current data showing there’s slowed growth in the PropTech CRE subsector, that’s not to say you shouldn’t keep an eye out for solid investment opportunities, as they are still out there and can definitely be lucrative. This is the main reason you’ll typically find seasoned, experienced investors in the CRE PropTech space. There is opportunity for large returns, but it is definitely slim.

    In the longer-term, there’s no reason right now to believe firms will switch back to investment in more physical property, especially when that money can be spent on human capital. Therefore, if you’re interested in PropTech investment strategies, you should not expect to see consistent positive performance from PropTech CRE investments. On the other hand – while this subject deserves a complete discussion on its own – residential PropTech is definitely on the rise (Aramati, Forbes). With a major push coming from cloud technologies and digital transformation, there’s a lot more investment in “smart” residential real estate as opposed to commercial real estate. Generally speaking, investments in “smart” technology have gained a tremendous amount of traction and thereby very large returns for earlier stage investors. Again, as we discussed in a previous article regarding PropTech, technological advancement is the future and investors who are looking for the next Amazon or Google in the real estate market ought to look into residential PropTech options with a more favorable outlook than commercial PropTech.

  • CRE Investing Through CrowdStreet

    CrowdStreet™ is an up-and-coming type of crowdfunding website that’s tailored specifically to CRE (Commercial Real Estate) investors. Founded in 2013, the site pairs thousands of investors on their marketplace and pools their money to invest in different CRE properties. The benefits that CrowdStreet claims to provide are: low cost, institutional quality real estate investments that have lower fees than REITs and only include pre-vetted projects.

    As of June 19th, 2021, CrowdStreet has completed 488 deals, raised $1.9B in capital, and returned $197M of investor distributions (www.CrowdStreet.com). With new deals launching every week, the CrowdStreet marketplace is also unique because it gives prospective investors the following three (3) projections on each CRE investment: (1) Targeted Investor IRR, (2) Targeted Equity Multiple, and (3) Targeted Investment Period. Keeping in mind these are all pre-vetted projects, this allows prospective investors to pick from multiple properties based on the attributes that are geared towards their goals.

    Since there are many different types of real estate crowdfunding websites, CrowdStreet in particular distinguishes itself because they target CRE properties specifically. They then break-down individual prospective gains, equity multiples, and the period the investor will have their capital tied up. This allows investors to see a clearer overview of their investment return potential and the amount of time their capital will be utilized for the CRE investment, so they can make more informed decisions, as well as better manage the risk of their overall portfolio. But there’s a catch. While CrowdStreet is continuing to grow along with their user base, an investor account minimum must be $25,000 and the platform is only available to accredited investors. For seasoned CRE investors, that may not be as big of a problem. However, for the average qualifying CRE investor, CrowdStreet’s business model is viewed as highly illiquid.

    Overall, while CrowdStreet offers distinct advantages to CRE investors, its limitations prevent it from reaching a wider audience. Clearly that’s their intention, but perhaps some of the requirements limit the potential success of their offerings. For example, if a non-accredited investor has a higher risk tolerance and is willing to invest the minimum amount, the CRE project may not get financing because that investor wouldn’t be accepted on CrowdStreet. Similarly, if an accredited investor is more risk averse, or is not in a position to immediately invest $25,000 in a given project over a period of years, there is no middle-ground and again, the CRE project may not receive financing. Concisely, within the limited scope of their business model, there is more CrowdStreet can do to broaden their user base and thereby pave the way for more CRE projects to receive financing.