Houston Business Journal | 04.10.2017
One of Houston's busiest developers is taking a novel approach to financing its latest real estate venture: crowdfunding.
Midway Cos., the developer behind Houston's CityCentre, Green Street and the newly announced Buffalo Heights development, has also been working on a 60-acre mixed-use development dubbed Century Square. The project, which is underway in College Station, will bring retail, entertainment space, two hotels, an office building and a mid-rise apartment complex to the college town.
Midway enlisted Houston-based Next Seed, an online crowdfunding platform, to finance Porters, a 6,000-square-foot upscale restaurant within the Century Square development. As of press time, $269,100 of the needed $400,000 was raised. Next Seed is behind other Houston-area projects including The Chapman & Kirby and Tout Suite's new co-working space, The Co-Op HTX.
A well-established developer utilizing crowdfunding is an unconventional move, but Midway CEO Jonathan Brinsdenspoke with the Houston Business Journal about why the company it using crowdfunding, its potential projects outside of Houston and the latest on the company's land deals.
What’s the strategy behind using Next Seed to finance Porters?
From a broad perspective, we’ve been interesting in crowdfunding for a while. In many respects, it democratizes capital in general, whether it is debt or equity. We’ve been looking at different ways to utilize the platform, whether it's things more specific like the restaurant or broader real estate projects.
(Crowdfunding) is no different than Airbnb. One person with a room suddenly has the marketing reach of Marriott. That’s the beauty of technology: it flattens the playing field. We believe it has a long way to go and it's going to be a powerful tool. We look forward to utilizing it.
Is this Midway’s first time using crowdfunding?
It's a strategic, long-term goal. One day, we'd like to integrate it in everything we do. We've been trying to find the right platform to the extent that we can have a strategic partnership.
What's something surprising about utilizing crowdfunding for a real estate project?
Well, I'd say the one thing that surprised me is the level of interest and detailed questions people have. I appreciate that from an investor's standpoint. I would look at something with the same critical eye. … I've been really impressed with the level of diligence in the questions we’ve received.
How's progress going at Century Square?
The project’s going well. The multifamily project, 100 Park, is over 50 percent leased, and we’ve been extremely pleased with progress there. Cavalry Court is open and has been incredibly well received from the market. We still have to open all commercial (portions) and Hotel George, and those should all be open in August. We’re trying to deliver the balance of the project before the school year.
Is Midway open to other opportunities in College Station?
You know, we haven't really looked. To be candid, we’ve had enough on our plate. We're focused on finishing (Century Square). We have the opportunity for future phases. Our focus, for the most part, is going to stay on Century Square.
Is Midway interested in other developments outside the greater Houston area?
Yes. We have another strategic initiative to really start looking outside of Texas, and we’re fortunate to have good relationships with capital partners and tenant partners. …We’ll be cautious and careful as we always are, and we'll be stringent about choosing what we will and won't do. But, within a year, we’ll be doing things in other markets.
When I spoke with David Hightower in January, he said Midway was considering a few land deals between 20 and 2,000 acres. Anything new to share? Do you see Midway closing on a significant amount of land in 2017?
Not currently. David’s been a huge (help on) East River. Although it's urban, it's a massive land development deal, so he’s been certainly utilizing his knowledge and skills on that.
This interview has been edited for length and clarity.