LOS ANGELES—Few subjects have sparked as much controversy or interest in commercial real estate as crowdfunding has. Whether or not it is viewed as a legitimate source of funding, there's no denying that the industry is growing. We spoke with CrowdStreet CEO Tore Steen to get his outlook on this burgeoning marketplace and fundraising vehicle going into 2015.

GlobeSt.com: What do you believe will be some of the largest trends in the overall crowdfunding industry in 2015?

Steen: I see five key trends occurring in the overall crowdfunding industry.

1. Crowdfunding will become a key consideration or part of financing for any startup. Not just an afterthought or interesting marketing avenue, the tools, reach and platforms are now there and proven for the entrepreneurs to leverage. This method for fundraising can be used by for-profit companies, non-profit companies and community groups. It will become as common to use the crowd as going to the bank.
2. We will see the acceleration of “funds” being launched—not just single assets—on crowdfunding platforms everywhere from equity-based commercial real estate to donation-based non-profit opportunities.
3. Specific to equity crowdfunding of commercial real estate, we will see more large CRE firms launch their own branded marketplaces to attract retail investors to their projects in an efficient and economical way.
4. With the delay of Title III of the JOBS Act and states continuing to roll out their own legislation around crowdfunding, we will see continued growth of platforms that have state-specific offerings.
5. With the rapid growth in this market, we will begin to see some very interesting merger and partnership activities starting to play out.

The future is bright for the continued growth of crowdfunding markets. According to the World Bank, by 2025, the global crowdfunding market potential could be between $90 billion and $96 billion. Today, it is about a $10-billion market.

GlobeSt.com: Given a year of real estate crowdfunding performances, how should investors interested in CRE crowdfunding deals evaluate the platforms in 2015 and any guidelines for success and mistakes to avoid?

Steen: As an investor evaluates the platforms as a means for exploring potential investment opportunities, there are several key areas they should consider. Investors should review the types of sponsors (commercial real estate operators and developers with postings) that are associated with the platform. In other words, what is the quality of the sponsors as demonstrated by their years of experience, expertise, projects and returns to their investors? Another key factor is the information that is being provided on each project. Investors should consider the depth and transparency of the information that is presented on the project, including legal documents, financials and other important details necessary for proper evaluation of the opportunity. Another important factor to consider is the team's experience level and expertise behind the platform. Knowing that the management team has years of experience in commercial real estate, Internet technologies and securities should be considered.

GlobeSt.com: What are emerging commercial real estate markets and sectors for crowdfunding in 2015? Why are they ripe for crowdfunding, and how can investors get in the game?

Steen: We see the following key trends accelerating in 2015 for commercial real estate markets and sectors:

• Increase in asset quality. For 2014, the types of assets that were predominantly marketed through real estate crowdfunding platforms were less than institutional grade, which is not surprising as smaller, entrepreneurial sponsors were logical first movers in the space. Now that the industry has begun to gain undeniable momentum, we expect larger institutions to enter the market and bring larger, institutional-grade properties.
• Increased investor participation. Accredited investors will continue to be exposed to the benefits of investing in alternative assets via equity crowdfunding platforms. The platforms themselves will increase their marketing budgets, improve their websites, make it easier for investors to invest via IRAs and defined contributions 401Ks and feature higher-quality investment offerings, so the practice will continue to gain acceptance amongst investors and participation rates will increase.
• Ground-up development. As the real estate market matures, we will see more ground-up development of property types such as industrial, office and mixed-use urban infill. Multifamily development has been strong for several years now, but much less so for the other property types. With vacancies decreasing, rents rising and the economy strengthening, developers will have a higher level of confidence to break ground on new opportunities.
• Product types. With the two bulges in our population caused by Baby Boomers and Millennials, certain product types that match their needs will be of interest—healthcare, senior housing, creative office and adaptive re-use.

GlobeSt.com: Will there be more crowdfunding commercial real estate platforms launching in 2015 or is this the year of consolidation?

Steen: Both. We will continue to see more platforms launching either with a product, market or financial-instrument expertise. More states continue to pass crowdfunding legislation, and Title III of the JOBS Act is expected to be finalized next year, which opens up more possibilities. However, I would expect that some platforms that have not been able to gain traction will cease or be consolidated with others.