Earlier this month, the crowdfunding slice of a new creative-office commercial project in Portland, Ore., went live, after an extended review by the Securities and Exchange Commission (SEC).
The goal of the 30-day Regulation A offering is to raise $1.5 million of the total $18 million project cost. The offering was put together by Guerrilla Development, a Portland real estate company that is focused on creating inventive and experimental projects.
Although Guerrilla Development has completed other similar projects with more traditional funding sources, this crowdfunding offering is Guerrilla Development’s first and is only available to investors in Oregon; Washington; California; Massachusetts; Virginia; and Washington, D.C. It’s an array that Guerrilla assembled after initially testing for interest in the project on the crowdfunding site Fundrise.
This offering is currently powered by a Portland-based real estate crowdfunding site called CrowdStreet. According to Guerrilla Development’s Web site, the minimum investment is $3,000, and the targeted investor annual rate of return is eight percent.
The Fair-Haired Dumbbell project site is located at the east side of the Burnside Bridge and is described by Guerrilla Development as a 56,000-square-foot office building with ground-floor retail in the heart of Portland.
The project will consist of two canted six-story towers decked in hand-painted original artwork on all eight of its elevations. At each level, sky bridges will connect the 4,000-square-foot office spaces, giving the creative companies who work there the ability to own their own floor (or two). No two elevations will be the same, and tenants and visitors alike will take in impressive views of Portland through windows of varying size. At the ground floor, the Fair-Haired Dumbbell will compliment its neighborhood with unique retail offerings, such as coffee on the way into downtown, and a cold beverage on the way out after work.
Though the project has been delayed, Kevin Cavenaugh of Guerrilla Development, said in the Portland Business Journal, that the SEC review, and also the design review process, have taken much longer than anticipated, and ground is now set to break on the Dumbbell in May, nearly a year later than originally planned. Construction should be a completed in approximately eight months.
According to Forbe’s and Crowdfunding Insider, $2.5 billion in crowdfunding volume was projected by the end of 2015 and is forecasted to increase to approximately $3.5 billion by the end of the year. Real Estate Crowdfunding is becoming an increasing popular investment vehicle for individuals, due to the lower-investment thresholds, such as $10,000 for “accredited investors,” to as little as $100 for other platforms which serve non-accredited investors through the use of Regulation A of the JOBS Act.
Crowdfund Insider notes as the commercial real estate crowdfunding offerings increase and the number of crowdfunding platforms grow, experts believe that there will be more platforms coming online, but they also expect increasing consolidation of existing crowdfunding firms. Further, given the various deal types being offered, such as equity offerings; debt and ‘peer-to-peer lending’ opportunities; underwritten deals; direct-to-investor private placements; capital raises for real estate portfolios and funds; and more, the service offerings of each platform will become increasingly segmented to specific investor and capital-raising preferences.
Finally, according to Crowdfund Insider, “as the market expands and platforms increasingly specialize in niche focus areas, their segmentation will breed the need for aggregation, since experienced real estate investors and rookies alike will need centralized entry points into the larger market. Aggregation, and enhanced data, will also add legitimacy and scale to the real estate crowdfunding industry – helping spur increased adoption of our promising (and rapidly growing) young sector.”
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