Nathan VonGunten
Director, GRS Group
(330) 267-4405
[email protected]
Online blockchain transactions in commercial real estate are still a long way from being close to mainstream, but some industry players are readying for that to change.
So far, the most widely publicized deal to date was the sale of a portion of the St. Regis Aspen hotel in the form of $18 million in digital tokens, which was open to accredited investors.
A recent webinar hosted by Commercial Observer, called “The Tokenization of Real Estate: Blockchain and Commercial Real Estate,” envisioned a future where it could be more common, and panelists discussed some pluses of doing business on that platform.
Two of the panelists’ firms were part of a blockchain deal in 2018 involving a multifamily building in Brooklyn, N.Y., Cayuga Capital Management, the private-equity firm that owned the asset, and Meridio, the firm with the platform under which the transaction was executed.
Among the main attractions for investors to blockchain are security, transparency and liquidity of capital, speakers said.
These deals are undertaken on a secure digital platform that can only be accessed by individuals with a network key. This leaves less room for misuse or manipulation of a transaction’s data.
“Improper things can’t be done to things on the system,” said Joseph Lubin, founder of ConsenSys, a tech firm focused on blockchain.
The business of buying and selling of digital tokens representing portions of the property can be done directly between parties, drastically cutting down transaction times and eliminating many third-party fees and processes. Owners can also determine the cash flow of a property in real time and possibly access liquidity from their investments instantly.
This platform could also open up the market to investors that don’t have direct involvement in the real estate investing world but want to reap its benefits.
“You could be sitting in the middle of America and decide to invest in a property in Brooklyn because you’ve done your homework on what’s going on in the Brooklyn market,” said Jacob Sacks, co-founder of Cayuga.
However, the commercial real estate industry is not one that easily embraces change, especially when it comes to technology, said Jason Greenstone, a senior director of retail services at Cushman & Wakefield.
“If it’s not broken, then there’s no reason to fix it,” he said of the mentality of many in the industry, but: “There’s more and more of an openness to start looking into these technologies.”