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StartEngine, Jamestown Invest helping individual investment in commercial real estate

Crowdfunding platform StartEngine is teaming up with Jamestown Invest to give investors the opportunity to get in on commercial real estate. Michael Phillips, Jamestown Principal and President and Howard Marks, StartEngine Founder and CEO join Yahoo Finance's On the Move to discuss.

Video Transcript

ADAM SHAPIRO: Welcome back to Yahoo Finance "On the Move." I'm Adam Shapiro, along with Julie Hyman. For some investors to get in on real estate, especially commercial real estate, you have to have huge amounts of money. We had a guest on at one point who was trying to make it more accessible, and yet the entry point was $25,000. But what if I told you the entry point now is $2,500?

Let's invite into the program at this point Howard Marks. He's the StartEngine founder and CEO, joining us from Beverly Hills. But also Michael Phillips from Jamestown Properties-- he's the principal and president. And he's joining us from here in New York City.

Howard, I want to start with you. Tell us what StartEngine is doing with Jamestown's portfolio and how the average investor can get in on this.

HOWARD MARKS: Yes, right. It is amazing to see that for the last 80 years, the average investor has not had access to private equity in real estate, mainly because of the rules. And that changed completely. And at StartEngine, we are a platform that help match consumers with private equity offerings, including real estate.

And Jamestown is launching today on our platform. And we're really excited to see the opportunity for our investors finally to have access to some of the more lucrative sides of real estate investing.

JULIE HYMAN: Michael, it's Julie here. I want to bring you into this and ask you about timing, right? It's always tricky to time anything that you're starting new or bringing onto a new platform. But right now, of course, it's particularly tricky because we're in a very uncertain economic time. There's a lot of turmoil going on on both the residential and commercial side of real estate.

So talk to me about what kind of demand you expect and from where at a time like this.

MICHAEL PHILLIPS: Sure. So we've continued to see investment through the last 12 weeks of the pandemic. And we've seen that demand coming from individual investors on our online portals. I'd say the product that we focused on in the last decade especially has been adaptive reuse of industrial buildings for office and community centers. And we think that that sector in particular, which is low rise, lower density, more outdoor space, will continue to resonate as people think about their choices going forward.

- Yeah, it actually reminds me, I think the one that you all are best known for is Chelsea Market here in New York City and selling that to Google's parent company, Alphabet. And I notice you all have some of these as well as in Atlanta, Southern Dairies being one of them. That's really interesting to me, because when you think about what we've gone through-- are still going through with the pandemic and the whole question around the future of work, what does that look like? What does office space look like?

I would love to hear from your perspective, what do you think that looks like? And how do you communicate that to investors?

MICHAEL PHILLIPS: Sure. I mean, I think that the idea of amenitization of the work place has been sort of in our-- in our psyche for the last sort of 10 or 15 years, and creating places that are more exciting, give people a reason to be there, make an environment that allows companies to attract and retain the brightest workforce, is sort of at the center of that. And as people think about how they work going forward, whether it's a day or two a week from home or coming in for specialty meetings, whatever those things may be, the workplace needs to be even more engaging and more aligned with those principles.

And so I think we've continued to test and iterate on that concept. And we think that that will continue to resonate with the workforce in America.

ADAM SHAPIRO: I want to ask this question to you, Michael, specifically. And forgive me for being a self-centered New Yorker, but as I watch this transition that major cities are going through, it seems as if you're poised to make-- I don't want to say a killing, but there's going to be a lot of commercial space that has to be repurposed. Can you give us a sense of what's coming to major metropolitan areas, not just like New York, but Chicago, Los Angeles, even San Francisco?

MICHAEL PHILLIPS: Sure. We've seen-- we were early in meatpacking in really the early 2000s, late 1990s in seeing what we thought was a growth in terms of these adaptive, reuse, industrial neighborhoods. I think you've see core midtown glass and steel buildings not really be in demand and the focus, like some of these buildings have been. So I think you're going to continue to see that trend. Whether that moves people out to the suburbs or into other markets, I think there's certainly a piece of that.

But I think providing better access to green space and less verticality and more light in the air and windows that open will continue to be important.

JULIE HYMAN: Howard, I want to bring you back in and ask you about your background and sort of the transition, because you're a co-founder of Activision and Acclaim Games, which is obviously quite a different world, or at least looks from the outside like a very different world from the world of real estate, although it is-- startup is the link here. So talk to me about that transition. And are there any commonalities? And why someone who has a background in gaming is now moving into something like this?

HOWARD MARKS: Well, you're absolutely right. It is unusual. I've been very successful in the video game industry. We've built the largest video game company in the world.

And for me, finance in many ways had that opportunity for a similar disruption. And what I mean by that is the ability to connect the ordinary consumer to the vast majority of the assets of the United States, which are privately held, the private equity market. It's 90% of the value of America. I really want to unlock that value for these investors.

So real estate is a-- it's a natural play. But we also have startups in technology. We have one that is raising close to $20 million. We have other startups that are raising a million dollars.

We're really helping these entrepreneurs get access to capital directly from the general public. And this is really to me a new disruption, something interesting that I wanted to pursue, mainly because I was an investor in many companies in Los Angeles here. And they failed because they couldn't raise any money.

Some of them were women-led. Some of them were minority-led. And they couldn't get the capital they needed.

And so to me, I looked at this as a real challenge of how to create a new game that will allow the ordinary investor to be a participant in some asset class that they've never had before, which was mostly for the wealthy.

ADAM SHAPIRO: OK, Howard Marks, StartEngine Founder and CEO, presenting a way for all of us to get in on something that makes a lot of people wealthy. And Michael Phillips, Jamestown Properties Principal and President, helping build the thing that makes people wealthy. Best of luck to both of you.