On this platform, you could buy the Empire State Building — or part of it

Want to own a piece of the Empire State Building or any other commercial property? Ben Sharma is betting that a lot of people would — if they only had the chance.

While working as a director at commercial real estate giant CBRE, Sharma noticed that buying and selling privately owned commercial real estate is “just laden with problems.”

Selling a building takes months, sometimes more, and millions of dollars in transaction costs. There are dozens of players involved and the transaction requires a high degree of expertise, Sharma said. “I was wondering, why hasn’t anyone thought of securitizing the building into shares that are traded on an exchange? If you did that, you would solve all of these problems.”

The Harvard MBA holder who is also a former U.S. Naval officer left CBRE in 2014 and started his own commercial real estate consulting and brokerage, OREVCO. Though it was going well, he continued to noodle with this idea of an exchange. The MIT Center for Real Estate was interested in the exchange concept and partnered with OREVCO, allowing Sharma to meet with faculty in 2015.

The feedback was invaluable. But then, he wasn’t quite ready to move forward.

But he recognized that “everyone has great ideas but unless they pursue them, it’s just an idea,” said Sharma. So last year he shut down OREVCO to focus 100% on building an exchange.

His new startup, Real Street X, won the real estate category of the 2020 Miami Herald Pitch Competition.

“For the first time in human history, we are going to make commercial real estate, which is one of the most illiquid assets you can invest in, as liquid as corporate securities,” said Sharma, who also held senior positions with Deloitte, Merrill Lynch and Microsoft before taking the entrepreneurial plunge. He is graduating this spring from FAU Tech Runway, a startup accelerator in Boca Raton, and was offered an investment from the organization.

There’s at least one other company, in the United Kingdom, trying to build a commercial real estate exchange but in a different way, Sharma said. He believes Real Street X could be the first one serving the U.S. market.

“So that means one day you can go onto our app and create an account and say I would love to buy a piece of the Empire State Building … and make that purchase instantly. If we do that, we are essentially democratizing this entire asset class, which in all of history has shut out everybody other than the super rich. That’s one thing I am extremely proud of.”

With the help of a small National Science Foundation grant in 2019, Sharma interviewed 45 senior executives and seasoned investors in person for about an hour each about the concept. Since then he has interviewed over 100 more stakeholders.

With that input, Sharma identified three dozen problems with the current ways of commercial real estate investing. “Our solution addresses all 36 pain points,” Sharma said.

“We are saving the buyer and the seller millions in transaction costs,” said Sharma. With Real Street X’s technology, “what takes months to do to execute a trade is now down to minutes. … Anyone can do this.”

Sharma, who previously directed operations for the U.S. Navy, is a member of Harvard Business School’s Rock 100, which comes with an extensive network. Sharma also graduated from Y-Combinator’s Startup School, in the top 10 percent of the class. Real Street X won the TiE Miami competition.

For his top team, Sharma chose seasoned executives at the top of their fields; three are retirement age. Some have experience starting companies and exiting successfully. “We are not a bunch of 20-year-olds.”

Sharma says he has raised two rounds of seed funding — he wouldn’t say for how much — and plans to raise a fourth and fifth round in the coming months.

The platform, in development, will be built on the blockchain to enable an efficient, secure and fully transparent process, Sharma said. “It makes us a very open company.”

Sharma said he is in process of seeking SEC regulatory approval and is lining up a major U.S. city to pilot the program when the time comes. A large financial company is interested in piloting it, too.

“This is like going to battle with a multi-headed dragon and all you have is sword and shield. This is a huge beast to slay and every single day I keep a very thorough list of everything that has been done, and needs to be done. Every day I check things off but add twice as many things,” Sharma said. “Sometimes I wish we were doing something simple like an app.”

This story was originally published May 18, 2020 at 6:00 AM with the headline "On this platform, you could buy the Empire State Building — or part of it."