CrowdStreet – Tap Into Alternatives to Institutional Capital
The JOBS Act of 2013 created a new legal framework enabling the public solicitation of commercial real estate investment opportunities to over 9 million U.S. accredited investors. Subsequent 2015 additions to the JOBS Act, known as Regulation A+ Tier I/Tier II, extended these opportunities and now enable the general public to invest in private real estate investment offerings. Public appetite for access to the formerly private world of commercial real estate opportunities has been enormous. Public marketplaces, such as the CrowdStreet Marketplace, have emerged to connect large pools of investors with aggregated sources of vetted investment offerings. At the same time, established real estate sponsors are recognizing the opportunity to create their own self-branded online investment destinations. These sponsors are deploying white-label online investment solutions such as CrowdStreet Sponsor Direct to promote new investments to their existing investor networks and to acquire large volumes of new investors from across the web. The emergence of this new class of CRE capital, large-scale individual equity capital, and the availability of powerful software like CrowdStreet Private Portal needed to manage these large volumes of investors, has created a rebalancing of traditional capital sources. As this recent GlobeSt article shows online capital formation is now beginning to displace institutional capital on select commercial real estate deals. Given the significant operational flexibility online capital provides over institutional capital, this is a trend that is only going to increase.