by Matt Shoor AIA LEED AP
An abiding mantra of the digital age is that technological progress has resulted in greater transparency of information and operations across business sectors. As the speakers from “ALT_Finance” can attest, the dictum proves no less true when applied to the real estate and building industries. Panelists for the fifth and final Transforming Architectural Practice event revealed a wide variety of new strategies and online tools currently being employed to procure and finance projects.
One of the most visible and well-publicized of these is crowdfunding. The general population is familiar with websites such as Indiegogo and Kickstarter, which allow individuals and organizations to generate financing, via donations, to launch a startup business or other projects. For the most part, the fundraising goals of these campaigns are modest. Regardless, the platform allows for interested parties to track campaign progress in real time.
Amanda Schacter, AIA, illustrated how her firm SLO Architecture was able to navigate successful Kickstarter campaigns. Several years ago, Schacter and her partner, Alexander Levi developed a design project called Harvest Dome. The floating structure was composed of discarded umbrella skeletons and plastic soda bottles, assembled with aid from local community groups. The plan was to install the dome in Inwood Hill Park Inlet in an effort to draw attention to New York City’s waterways. During transport, however, the structure foundered in the East River and was destroyed by officials after washing up on Rikers Island.
But SLO Architecture refused to abandon its vision. In an effort to reconstruct Harvest Dome 2.0, the firm turned to Kickstarter for assistance. Although initially skeptical of crowdfunding, Schacter ultimately felt that the campaign was a success – the architects met the financial goal necessary to realize the project. Schacter also said that the transparency of the funding process was ultimately a boon, for it allowed SLO to generate excitement about the project while mobilizing the community around a common cause. Subsequently, the designers launched a second round of Kickstarter funding, which permitted SLO to relocate the Dome from the inlet to the Gowanus Canal.
Not all crowdfunding is based on a philanthropic model. Companies have begun to use the platform as a means to raise great sums of money from small-scale investors. Consequently, as Brian Newman of Prodigy Network explained, crowdfunding has opened up access to markets that previously had significant barriers to entry. In the past, for instance, commercial real estate was an investment opportunity only available to the wealthiest of individuals. Prodigy, however, has already employed crowdfunding to generate financing for large commercial developments in New York City, with an investment threshold of $50,000.
In addition, to paraphrase Newman, in emerging markets, crowdfunding enables projects that were not possible in the past. Such was Prodigy’s experience in Bogota, Colombia, where it marshaled construction funds for the city’s tallest skyscraper, named BD Bacata, from more than 3,000 investors. The transparency of the fundraising process empowered the community to validate the project with their wallets.
Project procurement is another arena in which organizations are seeking to improve access and visibility. Geoff Lewis of Honest Buildings noted that, in the past, the real estate market was organized around pre-existing business relationships, and project teams often would be determined in advance by those connections. The only alternative was to submit onerous and time-consuming Requests for Proposals (RFP) in a scattershot attempt to land projects. Consequently, word-of-mouth and past precedent were crucial to obtaining new work, whether one was an architect, contractor, or design team consultant.
Honest Buildings (HB) wants to streamline the decision-making process so that the confusing and messy business of assembling a project team is easier. Essentially, HB acts as a matching service. Anonymous RFPs are sent to HB, which assembles a shortlist of vetted vendors from its database, based on qualifications. Lewis contended that this is beneficial to the architectural profession because it cuts down on networking and proposal-drafting time while expanding opportunities for new business. The invisible connections are now visible.
While each of the panelists came to the table with a diverse set of experiences, all seemed to agree that web-based funding and procurement tools are dramatically improving the architectural and real estate industries. Professionals now have greater access to potential donors, investors, or business partners, and the transparency of online platforms has led to significant community involvement and satisfaction. While these strategies are still in their infancy, rapid iteration will be sure to work out many of the defects in the future.
Matt Shoor, AIA, NCARB, LEED AP BD+C, is an architect, writer, and educator. He is a frequent contributor to e-Oculus, and can be reached at email@example.com.
Event: Transforming Architectural Practice Series: ALT_Finance – From Crowd Funding to VC for Architecture
Location: Center for Architecture, 06.09.14
Speakers: Geoff Lewis, VP of Marketplace Liquidity, Honest Buildings; Brian Newman, Director of Investments, Prodigy Network; Amanda Schachter, AIA, Principal, SLO Architecture
Moderator: Matt Shoor, AIA, LEED AP BD+C, Project Manager, Macrae-Gibson Architects, PC
Organizers: AIANY Chapter Professional Practice Committee