Commercial Investment Real Estate September/October 2017 | Page 19

technology is changing the game for commercial real estate, and crowdfunding is navigating a new way forward. Egalitarian Lending The evolving world of real estate marketplace lending con- tinued to grow at a phenomenal rate to $3.5 billion in 2016. The real estate crowdfunding sector is providing investors with both higher returns and lower fees, which makes it incredibly attractive. The opportunity to partially fund loans without the risks asso- ciated will only help increase adoption and the speed of accep- tance. The first rule of any investment is that a diverse portfolio will dilute the risk. The combination of lower risk and the ability to enter commercial real estate investment for as little as $1,000 to $5,000 offers many opportunities to unlock the potential for greater returns. The World Bank crowdfunding report also revealed that this relatively new way of raising funding is rapidly becoming a disruptive global influence. Asia raised $3.4 billion in 2016, which shows 320 percent growth in the sector. By crowd- funding volume, Europe ranks No. 3, with $3.26 billion. However, North America leads the charge by raising $9.46 billion annually. If these current trends continue, the World Bank predicted that the crowdfunding industry could raise between $90 billion and $96 billion by 2025. For comparison, this would be 1.8 times the size of the global venture capital industry today. Investing in commercial real estate typically has been out of reach for the average person. However, even cash-strapped millennials are using crowdfunding to add property to a new portfolio that can build a path to property investments. Minimizing any risk with a relatively low entry point and the lure of making bigger returns is an attractive proposition. These are among the reasons why marketplace lending is proving to be the next big thing for commercial real estate, and why inves- tors of all ages from every corner of the globe are embracing the opportunities it offers. Technology is a double-edged sword. In the case of crowdfund- ing, however, it’s breaking down geographical barriers and expen- sive entry points to allow many more individuals a seat at the table. As marketplace lending continues to change the way business is conducted, traditional banking should wake up and take notice. Allen Shayanfekr is CEO and co-founder of Sharestates.com, a real estate investment marketplace. Contact him at [email protected]. CCIM Development Specialty Track The CCIM Development Specialty Track program is one of the industry’s leading continuing education concentrations, providing commercial real estate developers, investors, and consultants with a comprehensive understanding of the entire process of development from due diligence to disposition. The program content is structured around the Real Estate Development Matrix developed by Daniel Kohlhepp, Ph.D., of the world-renowned Johns Hopkins Carey Business School. Next Classroom Courses: Introduction to Development Workshop Date: October 4-6 Location: Denver Date: November 10-12 Location: Chicago Tuition: Member: $985 REALTOR®: $1,135 Non-member: $1,285 Course Formats: Classroom and Online Instructor-Led To learn more visit www.ccim.com/dev-track or call [phone], opt 2 CCIM.COM September | October 2017 17