‘Opportunity fund’ managers favor urban areas, commercial real estate

The Architectural Team and Stephen Chung

Commercial real estate in large urban areas will be the big winner from the tax scheme aimed at boosting investment in needy areas, according to an analysis released in November.

But who most benefits from commercial real estate deals remains up for debate.

Fund managers raising capital through the Opportunity Zone incentive programs are most focused on commercial real estate and multifamily housing, primarily in the Northeastern U.S., the National Council of State Housing Agencies said.

NCSHA reviewed public information on 34 such “Opportunity Funds,” and found that commercial real estate is the investment focus of 24 of them. Multi-family residential development is the focus of 23.

Ten of the funds focus on the Northeast, and five specifically target New York. Only two funds refer to investment in rural areas.

As previously reported, Opportunity Zones are pitched as a win-win, but some housing observers worry that they may funnel investment dollars to areas that are already in the process of gentrifying, accelerating that process and leaving behind areas that need the most help.

Many sources told MarketWatch that investors will see real estate as a more easily understandable means of putting their money to work than other programs such as education or labor.


Blockchain Set to Change the Face of Commercial Real Estate As We Know It

Blockchain Set to Change the Face of Commercial Real Estate As We Know It

The real estate industry has seen significant growth since the recession. With market prices predicted to increase along with millennial demand in 2019, the industry is as welcoming as ever. Although the market is improving, it is still plagued by issues that make the investment process less convenient than it should be.

Major drawbacks of the real estate industry

Real estate investment has three major drawbacks: the presence of intermediaries, the lack of affordable funding options, and fraud.

Agents take up to six percent of the total payment made on a real estate asset. This means that intermediary fees would account for over $23,000 for a house that costs $400,000. Unfortunately, up to 80 percent of home buyers still use an intermediary and continue to pay these fees according to a report by the National Association of Realtors.

Real estate is also expensive and the prices continue to climb, limiting access for a greater part of the population. According to research by CNBC, an investment of $1 million will most likely buy about 270 square feet of prime property in New York. However, only about 10 percent of US residents can afford such a price tag.

Finally, the commercial real estate industry is rife with fraud, not just in the United States, but globally as well. According to a statement by the FBI, the internet crime complaint center saw a 480 percent increase in real estate fraud complaints filed in 2016. These crimes, including title fraud and online sale scams are aided by the rarity of trusted platforms where real estate documents can be verified.

How exactly can blockchain fix these issues?

A blockchain is an immutable ledger in which transaction data can be recorded. Its benefits include transparency, traceability, accessibility, and enhanced security. When implemented in the real estate industry, these properties can solve its major issues.

Blockchain real estate platforms eliminate the need for intermediaries like lawyers and agents by providing a means of property verification and payment to buyers. Paying for property using cryptocurrencies can also help buyers bypass bank fees. It cuts the fees associated with escrow by offering smart contracts that can be customized according to a users’ needs.

The tokenized nature of cryptocurrencies like Bitcoin and Ethereum makes crowd ownership of real estate possible. Those who cannot afford to purchase the whole property can simply buy a part of it, like buying shares in a company. Such investors would receive transferrable tokens that represent their shares and can be verified easily on a blockchain. This makes real estate investment accessible to more people.

Blockchain can also prevent fraud in the industry by providing a way to easily authenticate property documents. As these properties are transferred, their records are added to the blockchain and a comprehensive history is formed. In the event of a sale, buyers can easily check if property is fraudulent.

Bringing blockchain innovation to real estate

Several companies are working to bring these solutions to the commercial real estate industry. One such company is i-House.com, which implemented a series of ATO (Asset Tokenization Offering) projects in less than a one- year span. These projects allow users to crowdfund real estate development projects using IHT, the company’s cryptocurrency. So far, their reach has extended to the U.S., Japan, Thailand, and the Philippines.

The i-House ATO model provides real estate accessibility and a verifiable platform for related transactions. By Implementing such a concept in the industry, the i-House ATO platform is positioned to disrupt it positively. i-House.com Chairman and Founder, Ricky Ng., said:

“We aim to create a shared economy asset management ecosystem that spans across the globe, i-House ATO provides real estate owners, developers, and end users the means to own and share assets easily”


Commercial real estate activity cruising at happy pace

Commercial real estate activity cruising at happy pace

The commercial real estate market is humming right now, with new users, new investors, new construction and lots of redevelopment of existing spaces in multiple places across the Grand Valley.

“People are really seeing the city’s commitment to downtown and the riverside connection,” said Brian Bray with Bray Real Estate, who recently sold a building on S. Seventh Street, between Main Street and Riverside Parkway.

“My wife liked the area down there,” said Allen Akey, who purchased the restaurant building at 811 S. Seventh with his wife, Lena Combs. “She thinks it’s going to be an upcoming, growing area.”

Akey and his wife will do an extensive remodel of the existing building, but hope to open their new breakfast and lunch restaurant, named Sunrise, by the first of the year.

Although there are commercial projects elsewhere, downtown is generating both buzz and dollars, as end users and investors revamp older buildings in hopes of generating more business and opportunities.

“I’ve always wanted to open my own bar, and more than anything, it came down to timing,” said Tim Babbitt, who is opening the Feisty Pint bar at restaurant at 359 Colorado Ave.

“It’s more of a neighborhood pub,” Babbitt said about the soon-to-open business.

Babbitt has already hired key people, who are hiring other staff members. He hopes to have the establishment open by December 1.

The city planning office is currently working with another property owner who hopes to open a brewpub on S. Second Street.

Pitkin Avenue is also seeing redevelopment with an office building at Sixth and Pitkin changing hands and getting attention from new owners, and the office building at Second and Pitkin also getting a makeover.

“It was attractive, it was downtown,” said Tony Englbrecht, one of the partners in the building at 215 Pitkin Ave., “and it was a free-standing building with it’s own parking. Downtown growth is heading south with the new hotel and renovations at the train depot.”

The historic former train depot’s owner, Dustin Anzures, is in discussion with prospective tenants, as well as contractors and tradespeople, to create the best use of the historic Grand Junction Depot building.

“We want to do the very best job we can,” Anzures said, who is looking for a local restaurant tenant to make a commitment on the location prior to finalizing plans on the building.

“We have high hopes of doing something with this building,” Anzures said, “creating something that doesn’t currently exist in the Grand Valley — a historic, landmark building that’s been repurposed. We want ours to be a happy place.”

Anzures also hopes the depot will get a safer and more pedestrian-friendly connection to Main Street and the rest of downtown when CDOT finalizes its plans for the Pitkin curve at First and Pitkin. He believes that a more pedestrian-friendly route would bring train visitors who are passing through on the California Zephyr into the more established parts of downtown. Of course, he’d also like to create great experiences for them should they decide to hang out at the Grand Junction Depot.


Nobroker enters commercial realty space

File photo

Riding high on rising demand for commercial, office and retail spaces especially from small companies, property portal Nobroker.com has entered the segment and expects this to contribute 30 per cent of revenue in a few years, a top company official has said.

The company which is operational in Mumbai, Bengaluru, Pune, Chennai, and Gurugram, is also planning to expand its presence to top 50 cities in the next few years.

“There are over 42.5 million small and medium enterprises, which are the biggest consumers of small commercial properties in the country. There is also a huge investment potential in commercial real estate market that offers a rental yield of 7-12 percent, which is way higher than residential real estate.

“Our entry is in line with the rising demand for commercial office and retail spaces, especially with the fall in rupee and the rising interest from NRIs,” founder and chief executive Amit Agarwal told .

In the new business, the company is targeting small commercial units, offices and retail spaces in the 100-5,000 sq ft range.

“Our typical tenants are owners of SMEs looking to take on rent these premises for shops or offices. The other customers are those looking to enter commercial space for better rental yield. We have also seen a lot of demand from NRIs thanks to the rupee plunge and better yields,” Agarwal said.

As per estimates, currently, the top 25 cities generate annual brokerage worth Rs 14,000 crore in commercial rental, which is growing at 13 per cent annually.

The brokerage from commercial market sales is around Rs 7,000 crore.

“We realised that after successfully establishing ourselves as a key player in residential real estate, we are ready to take the next natural step. We understand the pulse of the market and aim to disrupt this annual brokerage of Rs 21,000 crore with this recent expansion into the commercial real estate sector,” he added.

When asked how much revenue the company is expecting from the commercial segment, he said, “almost all the revenue come from the residential segment now. In the long run, the revenue mix would be 70:30, where residential would be 70 per cent and commercial would be 30 per cent.”