The dynamic landscape of the investment sector has been transformed by technological advancement. Crowdfunding is one of the significant breakthroughs that have reshaped the real estate industry, providing alternative routes to capital for property developers and democratizing access to investment opportunities for retail investors. This approach, particularly in commercial real estate, has simplified processes and expanded investment portfolios for many individuals across the globe. The disruptive role of crowdfunding in real estate has been felt over the past decade. With the advent of new technologies, it has become more accessible for people to pool resources and invest in large-scale commercial real estate projects previously exclusive to institutional investors or wealthy individuals. It’s a brave new world, and understanding the nuances of this transformative practice is critical to unlocking its potential benefits. The Rise of Real Estate Crowdfunding Real estate crowdfunding began as a natural progression from the general crowdfunding phenomenon, expanding to cater to the unique needs of the real estate industry. The practice gained significant traction post-2012, with the passing of the Jumpstart Our Business Startups (JOBS) Act in the United States, which eased many of the existing securities regulations and made it feasible for companies to seek public funding. This legislation made crowdfunding, including real estate crowdfunding, more accessible and streamlined, leading to an exponential growth in the number of platforms and a swell in the volume of transactions. From 2014 to 2020, the industry’s global transactional value grew from approximately $1 billion to over $10 billion, as per Statista data. Understanding Commercial Real Estate Crowdfunding Commercial real estate crowdfunding involves pooling funds from large investors to purchase or develop commercial properties such as office buildings, shopping centers, or apartment complexes. This model democratizes the investment landscape, enabling individual investors to participate in commercial real estate transactions with relatively small amounts of money. Investors become shareholders in the property, earning returns from rental income and, potentially, the property’s appreciation in value. Most crowdfunding platforms allow investors to select from various projects based on their investment goals, risk tolerance, and time horizons. Advantages of Crowdfunding in Commercial Real Estate There are several advantages to crowdfunding in commercial real estate. First, it democratizes investment, allowing people who may not have had the opportunity to invest in commercial real estate the chance to do so with smaller amounts of money. It significantly lowers the barriers to entry for such high-value investments. Secondly, it opens up opportunities for diversification, as investors can put money into various properties across different locations and types, thus spreading their risk. Thirdly, investing through crowdfunding platforms can often lead to passive income generation, given the regular rental incomes associated with commercial properties. Finally, crowdfunding platforms offer efficiency and convenience. The process of investing is often simple and transparent, with most platforms providing investors with detailed information about the properties, projected returns, and inherent risks. Top Real Estate Crowdfunding Platforms for Commercial Investments Numerous platforms are catering to investors interested in commercial real estate crowdfunding. RealtyMogul: RealtyMogul is an industry leader known for its rigorous project selection process, focusing mainly on multifamily and office buildings. Fundrise: Fundrise offers an easy-to-use platform, and investors can start with as little as $500. CrowdStreet: CrowdStreet focuses exclusively on commercial properties and has a minimum investment requirement of $25,000. RealCrowd: RealCrowd offers a variety of commercial properties to choose from, including retail and office spaces. Before choosing a platform, investors should thoroughly research and consider their financial goals, risk tolerance, and investment horizon. The Impact of New SEC Guidelines on Real Estate Crowdfunding The Securities and Exchange Commission (SEC) has enacted various guidelines to protect investors in crowdfunding platforms. These guidelines, updated in 2020, increased the annual crowdfunding limit from $1.07 million to $5 million for companies. This adjustment has allowed larger and more established real estate developers to utilize crowdfunding for their projects, thus providing retail investors with more robust and secure investment opportunities. However, the SEC has also established guidelines on who can invest and how much they can invest based on their income and net worth. These rules are in place to protect retail investors from taking on undue risk. As always, investors should do their due diligence and understand the potential risks before investing. Investing in Grocery-Anchored Commercial Real Estate One type of commercial real estate that has garnered significant attention from crowd-funders is grocery-anchored real estate. These are commercial properties that host major grocery store chains. They are seen as relatively recession-proof investments because grocery stores generate stable foot traffic and revenues, even during economic downturns. Crowdfunding platforms have begun to offer such assets as part of their portfolios, providing investors with a viable path to add low-risk, steady-income properties to their investment mix. Unlocking Diversification and Passive Income Potential In the realm of investment, diversification is key. Real estate crowdfunding allows for substantial diversification as investors can spread their investments across different types of properties, geographies, and projects. This spreading of risk can protect investors from the volatility of individual markets. Additionally, commercial real estate investments can generate passive income. Many commercial properties have long-term leases, generating a steady rental income stream. This passive income and the potential for property appreciation make commercial real estate an attractive investment option. Bottom Line The innovation of crowdfunding has reshaped the landscape of commercial real estate investing, democratizing access, broadening diversification, and paving the way for passive income generation. With careful research and understanding of the potential risks, individuals can leverage these platforms to make their entry into the world of commercial real estate investment. FAQ Section What is commercial real estate crowdfunding?  Commercial real estate crowdfunding pools funds from large investors to purchase or develop commercial properties such as office buildings, shopping centers, or apartment complexes. How does crowdfunding work in commercial real estate? Investors become shareholders in the property, earning returns from rental income and potentially the property’s appreciation in value. Most crowdfunding platforms allow investors to select from various projects based on their investment goals,

When it comes to commercial real estate, understanding the intricate metrics and measurements involved is vital. One such crucial concept is the Gross Leasable Area (GLA), which is frequently used and integral to real estate. Understanding what GLA is, its significance, and how it’s calculated can make a substantial difference in your commercial property dealings. GLA is a primary factor in determining rental rates, comparing properties, and projecting potential revenues for both landlords and tenants. It helps create a level playing field when comparing different properties and clarifies the commercial property space. So, what exactly does GLA mean, and why does it hold such importance? Understanding Gross Leasable Area  Gross Leasable Area, often called GLA, refers to the total floor area designed for tenant occupancy and exclusive use. It includes the base area of the premises plus any mezzanines, balconies, or loft areas that the tenant can utilize. GLA excludes areas that are devoted to the common areas of the building, such as lobbies, restrooms, stairwells, elevator shafts, and mechanical rooms. The Importance of GLA for Projecting Potential Revenues In commercial real estate, one of the key considerations for landlords and investors is the potential revenue a property can generate. This revenue is mainly determined by the rental rates, which are typically quoted on a per-square-foot basis. Therefore, the more leasable square footage a property has, the more revenue it can generate. For example, consider a commercial building with a GLA of 20,000 square feet. If the average rental rate in the area is $30 per square foot per year, the building could generate annual gross revenues of $600,000. How to Calculate Gross Leasable Area – BOMA Standards The Building Owners and Managers Association (BOMA) sets the standards for measuring GLA. According to BOMA, the GLA of a commercial property should include all tenant areas, including mezzanines, balconies, or loft areas. It should exclude common areas such as lobbies, restrooms, stairwells, elevator shafts, and mechanical rooms. Here’s how you can calculate GLA according to BOMA standards: Measure the Gross Area: Start by measuring the total area of the building, including both leasable and common areas. You can do this using building blueprints or architectural drawings. Deduct Common Areas: Subtract the area devoted to common areas from the gross area. This will give you the GLA. Factors Affecting Gross Leasable Area in Commercial Properties Several factors can affect the GLA of a commercial property. They include: Building Design and Layout: The design and layout of a building can significantly impact its GLA. For instance, a building with a more efficient layout that minimizes common areas can have a higher GLA. Local Building Codes and Regulations: Local building codes and regulations may dictate how much of a building’s total area can be designated as a leasable area. Renovations and Alterations: Any renovations or alterations to a building can change its GLA. For instance, converting a common area into a leasable space can increase the GLA. GLA vs. Rentable Area: What’s the Difference? GLA and Rentable Areas often need clarification but represent different things in commercial real estate. While GLA refers to the total floor area designed for tenant occupancy and exclusive use, Rentable Area includes the GLA plus a pro-rata share of the building’s common areas. For instance, if a tenant leases a 2,000-square-foot suite in a building with 200 square feet of common areas, their Rentable Area would be 2,000 square feet (GLA) plus their share of the common areas. GLA for Tenants: Net Leasable Area (NLA) vs. Gross Leasable Area From a tenant’s perspective, the Net Leasable Area (NLA) might be a more relevant metric. The NLA is the portion of the GLA that the tenant can actually use for their operations. It excludes areas within the leased premises that the tenant cannot use, such as structural elements, interior walls, and utility closets. For example, a tenant might lease a space with a GLA of 2,000 square feet. However, after subtracting the area of interior walls and utility closets, they might only have an NLA of 1,800 square feet to use for their operations. Mistakes to Avoid When Measuring GLA When determining the Gross Leasable Area of a property, precision is paramount. A small miscalculation can significantly affect the valuation of a property and its projected revenues. Here are some of the most common mistakes made during the GLA calculation process and how to sidestep them: Relying Solely on Old Blueprints: Property layouts can change over time due to renovations or redesigns. Always confirm the accuracy of any old architectural drawings by comparing them to the current state of the property. Misidentifying Common Areas: Incorrectly categorizing certain spaces as either leasable or common can skew your GLA. For instance, incorrectly including a shared hallway as part of the GLA can inflate the leasable space figure. Ignoring Local Standards: Different regions or jurisdictions might have their own guidelines on what constitutes GLA. Make sure you’re aware of and adhering to local regulations and industry standards. Overlooking Vertical Spaces: Mezzanines, balconies, or loft areas can sometimes be forgotten in the GLA calculation. Ensure that all occupiable spaces, both horizontal and vertical, are included. Using Inaccurate Measurement Tools: Using outdated or miscalibrated tools can lead to inaccurate measurements. Regularly check and calibrate your tools, and consider adopting digital tools that offer higher precision. Negotiating Leases with GLA in Mind The Gross Leasable Area is more than just a metric – it’s a powerful negotiating tool in the realm of commercial real estate. Understanding its intricacies can offer a competitive edge for both landlords and tenants. Here’s how: For Landlords: Setting Competitive Rates: By understanding the exact GLA, landlords can set per-square-foot rates that are both competitive in the market and profitable for them. Flexible Space Allocation: With a clear idea of GLA and common areas, landlords can offer flexibility to potential tenants by potentially reconfiguring spaces to suit tenants’ needs. Transparency: Providing clear and accurate GLA measurements can foster trust with potential