Weekend Interview: CrowdStreet CEO Tore Steen

This series gets into the heads of the decision-makers of CRE, the people shaping the industry by setting investment strategy, workplace design, diversity initiatives and more.

Tore Steen is CEO of CrowdStreet, a crowdfunding marketplace for commercial real estate investment. CrowdStreet has funded more than 700 deals, with more than $4B invested since Steen and Darren Powderly co-founded it in 2012. 

Steen said he sees opportunity all over the place for real estate in 2023: Multifamily, hospitality, industrial and life sciences are all on his radar. What he isn't as convinced about is senior housing. Though demand is there, he said it is often overstated by people who don't truly understand the demographics and needs of the baby boomer generation.

Steen came from the tech world before co-founding CrowdStreet, with stints at Janrain, WebTrends and EarthLink. 

The following has been lightly edited for style and clarity.

Bisnow: Baron Rothschild once said the “time to buy is when there’s blood in the streets.” Where is the blood today?

Steen: Blood in the streets is a little strong, but I see a lot of opportunities in numerous real estate sectors.

Hospitality: Specific hospitality properties, particularly those hotels in vacation markets with pent-up travel demand, are quickly regaining lost ground. And in the “age of the new traveler,” remote work has given many people the flexibility to extend vacations and work from their destination. Blending remote work into leisure travel can create new opportunities for the hospitality industry and, subsequently, the hospitality investor.

Industrial: When inflation is high, industrial properties tend to have less operational risk, thanks to the triple net nature of leases, where tenants pay all the expenses. This can help insulate these deals as operational costs rise and protect an investor’s real returns. 

Multifamily: There is also a lot of opportunity in ground-up multifamily developments. The tremendous rent growth in 2021 led to the massive appreciation of this sector, often outpacing the increase in construction costs, which were exorbitant in the aftermath of the pandemic. 

Life sciences: Life sciences is one of the fastest-growing industries with a record $70B of private and public capital poured into life sciences-related companies in the U.S. in 2020, a whopping 93% increase from the previous record of $36B received in 2018. 

Life sciences companies tend to cluster around specific areas. In a report by CBRE, the top markets for life sciences real estate include Boston, the San Francisco Bay Area and San Diego, where demand grew by more than 34% since mid-2020. 

Bisnow: What is your most controversial CRE opinion and why are you right about it?

Steen: Conventional wisdom in the CRE industry is pointing to a "silver tsunami" that will propel the business model of senior housing to new heights this decade. However, I'm not convinced that the demographics alone of aging baby boomers will necessarily equate to outsized demand for senior housing for a few reasons. First is timing. The oldest baby boomers won't turn 84 until 2030, which is becoming the average age of a new resident of an assisted living facility. So, at a minimum, the wave likely arrives much further in the future than most currently expect. Second, as a nation we're moving into assisted living facilities at increasingly older ages, yet our life expectancy is not increasing. This is reducing the average resident stay to less than two years, which is relatively brief considering the complexity in moving in new residents who are in their 80s, and in situations where you typically need to sell not only the resident but their family as well. Finally, every year, new advancements in technology make it easier for seniors to age in place rather than enter an assisted living facility. Since the decision to move into senior housing is typically needs-based, I see possible scenarios where breakthroughs in areas such as robotics massively change the market dynamics for the senior housing industry and challenge many of the existing norms. I have no doubt there will be winners in the space as the next decade unfolds, but the assumption of the silver tsunami being a tide that lifts all boats fails to account for the myriad factors at play.

Bisnow: If you weren’t in real estate, what path would your career have taken?

Steen: I actually only came to real estate through the tech angle within the last decade. My co-founder, Darren Powderly, was the one with the deep CRE experience prior to CrowdStreet. My expertise was leading technology companies and bringing innovative solutions to both consumers and businesses who traditionally had not leveraged the power of the internet or software. It was the melding of our two worlds that made CrowdStreet possible.

Bisnow: What is one thing you would do differently from early in your career?

Steen: I would have made the leap to startups and building new ventures sooner. While my earlier career in banking, management consulting and larger public companies was great training ground and intellectually stimulating, moving outside my comfort zone and jumping into the startup world has been incredible. I had entrepreneurial desires in college, but put those on hold for a more established career path earlier.

Bisnow: As a leader, how do you decide who is worth mentoring and who is simply not a good fit?

Steen: It all starts with the desire to learn. If the mentee does not demonstrate that both in actions and words, then it most likely is not a good fit. If their motivation is simply to gain a reference or impression that the mentor endorses them, then I won’t proceed. However, when I can tell that the person is truly looking to better themselves through learning and gaining insights from my experiences, then I am excited to be a mentor. One of the best mentees I had would come to every meeting with objectives and an agenda — talk about making it easy for me to want to help that person!

Bisnow: What are your thoughts on the metaverse? Does it have any relevance for CRE?

Steen: The thing about real estate is that it’s just that — real. No matter how much of our lives move online, whether that’s the metaverse or augmented reality or something else, we will always rely on physical spaces in some way. We need somewhere to buy groceries — even if we order them online, they are stored and shipped from warehouses.

We will all need to see the doctor or dentist in person at some point. The products we use every day have to be manufactured somewhere. Even the metaverse relies on data centers, which are a type of CRE.

Bisnow: What do you see as the lasting impacts of the pandemic on CRE?

Steen: Think about how small our worlds were for the past two years. A lot of us realized just how much we use, interact with and value CRE once it was no longer available to us. We couldn’t go to the gym, to our favorite coffee shop or even the doctor’s office unless it was for essential care.

But the lasting impact will likely vary by sector. The real estate that was labeled as “essential” — things like grocery stores, pharmacies, the infrastructure that supports the supply chain, medical R&D labs — got even more valuable over the last three years and will probably continue on that path for several more. Other property types, like hospitality, were practically frozen, but have since surged toward recovery because so many people couldn’t wait to take that delayed vacation. But then other sectors, like office, are still figuring out what the “new normal” will look like.

Bisnow: As you know, there is a massive conversation underway regarding advancing more people of color and women into the C-suite. What are you doing to address those voices and that movement within your own organization?

Steen: Being successful starts with an expression of who we are as an organization through our values: collaboration, respect and impact. Our values and beliefs are reflected in how we hire, coach, train, lead, recognize and work together as a team. Since May of last year, three of our five recent senior executive hires were diverse, so we’re walking the talk.

With these in mind, there are two main paths to the C-suite, either developing from within or hiring executive talent from the external marketplace.

When we think about developing from within, it’s really about creating a system of practices and behaviors and an inclusive environment versus any single effort. It starts with the composition of our workforce and examining any bias in our own recruiting processes. We actually just achieved one of our recruiting goals this year, ensuring that a) the ratio of diverse applicants was improving and that b) the rate at which diverse candidates make it through to interview stages are more representative and on par. Our actual hiring decision practices are showing a slight bias in favor of women and diverse candidates, which helps to improve our overall mix over time.

How have we moved the needle?

We’ve invested in our talent acquisition team who actively source diverse candidates.

We started a small “recruiting labs” fund to explore and work with some very interesting new technology that removes bias from the language we use in our descriptions, all the way up to improving how, where and who we source.

And we have worked to formalize “This is How We Recruit” to be sure that we run solid recruiting processes and candidate experience every time.

Once inside the “front door,” it is critical to create a culture of inclusion and diversity while developing and adhering to fair processes. We know from our own internal survey experience that both our “inclusion” and “learning and development” engagement dimensions share greater than 85% positive sentiment. We recently redefined our corporate social responsibility pillars to E3 (empower, equip and educate) so that we are a positive influence on the world around us. This tends to create a positive and magnetic culture for diverse backgrounds. When it comes to leadership opportunities, we have a policy of posting all management roles for transparency; our people managers are now 40%-plus diverse and increasing. And we just finished defining our Leadership Charter and Expectations, which has a strong emphasis on strengthening our foundation through enabling, empowering and championing our values. We’re definitely excited by the progress we’ve made and look forward to growing more diverse leadership from within. 

But let’s be clear, you have to be committed. It’s too easy for hiring managers to take shortcuts with the people they know, so you have to reinforce quality over speed. 

One challenge in a high-growth environment is growing from within while ensuring that our top leadership has proven experience for tomorrow. That does make our C-suite appointments more apt to be filled through external search. We’re crystal clear defining the job, responsibilities and selection criteria before we ever get started to ensure selection bias is minimized. And then we ensure we get the right funnel of qualified diverse candidates by engaging with third-party executive search firms. The market for seasoned executive talent is always competitive. So we think that some of our internal practices help ensure we put our best foot forward. For example, we fully embraced W3B (work where you work best) and then offer FTO (flex time off). This ensures we can search for the best leadership anywhere in the U.S., and then when we find them, we have the right flexibility to ensure that they can balance their work and life needs. This helps widen the diversity candidate funnel substantially.

Bisnow: So, this is the weekend interview. What’s your typical weekend routine?

Steen: “Typical” is probably a stretch term, as being in a rapid growth entrepreneurial company, the week tends to blend into the weekend. However, I do make sure to carve out a good amount of time with my family. The activities normally center around outdoor activities such as hiking, biking and paddleboarding, and many times include our family golden retriever. Also, being new to Austin, we are making our way through exploring the awesome food scene here.