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Women Are Now Required On Some CRE Boards, But Execs Say There's A Lot More Progress To Be Made

Editors note: This story is the first in a series examining the gender diversity of boardrooms at some of commercial real estate's largest publicly traded companies.

When California passed legislation in September 2018 requiring a public company based in the state to have at least one woman on its board, nearly 100 companies were left scrambling to comply with the first such law in U.S. history.

The bill, SB 826, which had a deadline of Dec. 31, 2019, is one of several steps for women in CRE that are happening in tandem with efforts to promote increased female leadership in the industry. The rest won't happen by chance, women leaders in the sector say.

A CREW San Francisco event that occurred earlier this year. Cushman & Wakefield Director Samantha Low, the CREW San Francisco president, touts CREW and groups like it as crucial for more diversity in commercial real estate.

Thus far, SB 826 appears to have had its intended effect. Only about a year after nearly a third of publicly traded California companies had an all-male board, now just 4% do, and they face a $100K penalty, according to a report by KPMG. Moreover, of the 138 women added to California boards last year, 62% were first-time directors, easing fears of "overboarding."

For companies already compliant with the bill, like Los Angeles-based CBRE Group, progress is being made one step at a time. In the almost eight years since CBRE Executive Managing Director Georgia Collins transitioned into the industry from another one, it has made noticeable progress thanks to a concerted push, she says.

“I’ve seen a significant change in eight years,” Collins said. “There’s still work to be done, and I don’t think we’re done by any stretch of the imagination. But I think we’re moving in a positive direction.”

Many of the strides already made aren’t unique to commercial real estate. As Collins with CBRE, as well as Cushman & Wakefield Director Samantha Low, have witnessed the gender makeups of their companies’ leadership change, so have some of the C-suites and boardrooms across the country.

The push for diversity has measurable economic effects. A recent report by investment firm The Carlyle Group found that portfolio companies with at least two board members who are either female, black, Hispanic or Asian saw three-year earnings almost 12% higher than companies without such diversity, backing other studies finding similar performance differences with different levels of diversity.

Even with an apparent profit motive, more inclusion won’t come by itself, Collins said, adding that she believes the industry needs to do more than just wait for the world around it to change.

“We cannot just assume that that will happen,” Collins said. “We can’t, just by saying something should change, expect that it will change. We have to actively have a hand in making it change.”

Annual reports by 2020 Women on Boards, a public awareness and advocacy campaign, found that women hold just 20.4% of the board seats of companies in the Russell 3000 Index, which tracks the 3,000 largest publicly traded companies in the U.S.

That figure, now just above the campaign’s namesake 20% threshold, is up from the year prior one's 17.7%. A closer look shows the largest companies have the most women at the board level. Women occupy 27.7% of board seats of the 100 largest companies in the index, according to the research.

At CBRE Group, a Fortune 500 company, the board has become slightly more diversified and inclusive, now including three women (up from two women when Collins started) and three additional men.

“We’re starting to see some of the positive outputs of the effort we’ve made," she said. "But it’s required a real, concerted effort to change something that I think a lot of people admitted wasn’t right to begin with.”

That movement includes policies like one CBRE put in place last year, which required every employee at director-level and above had to have at least one performance objective tied to diversity or inclusion, or face a hit to their bonus, Collins said.

Still, hand-in-hand with adding women to CRE’s boards has to be bringing women into the industry to begin with, said Jay Paul Co. Director of Acquisitions and Capital Markets Kristin Molano, who is also noticing a change in the industry’s gender makeup. She says that more outreach needs to start in college and should include more mentoring programs.

“It starts with people entering the industry,” Molano said. “When we’re looking for candidates [at Jay Paul Co.], we’ll put a blast out through various channels, and typically we do get more men applicants than women.”

While more cultural changes might need to happen to retain women once they have entered the industry, there are tools that could keep them involved in employment policy and outside the office. That includes continued mentoring and advocacy, both from male and female colleagues, and from employees themselves.

Low, who also serves as Commercial Real Estate Women of San Francisco president, touts CREW as a difference-maker in how it can foster mentoring and advocacy, as well as efforts by companies like Cushman & Wakefield.

She attributes improvements she has witnessed while at Cushman & Wakefield, which has four female board members, to practices like its use of employee resource groups, or voluntary groups for different demographics within an organization. Low leads Cushman & Wakefield’s Women’s Integrated Network ERG and its recently formed ERG for Asian and Pacific Islander employees at the firm.

A CREW San Francisco golf tournament event.

CRE has also been somewhat responsive to cultural changes beyond its industry, even if effects are somewhat hushed

Noticeable progress in workforce relations came out of the #MeToo movement and adjacent momentum, according to Newmark Knight Frank Vice Chairman Elizabeth Hart.

“In the wake of recent women’s movements, there has been a lot more understanding of how other people are viewing situations, a better sense of camaraderie and more trying to find a solution where more types of people work together productively,” she said.

As of 2015, women occupied 43% of all CRE positions, up from 36% a decade prior, according to data compiled by CREW, which releases studies on the matter every five years. Getting women into leadership positions has remained a more intractable issue.

Hart pointed out that while there may be slightly more women executives and board members now compared to when she started 15 years ago, a gender imbalance that gradually widens further up the corporate hierarchy is evidence of work still needing to be done. Others agree.

“I do feel like commercial real estate is not necessarily at the same level of inclusion as other industries,” Hart said. “But I think the awareness that business will be better if commercial real estate is more inclusive exists.”

Skyline Enterprises Chief Operating Officer Jessica Carps, a member of the commercial construction company’s board of directors since 2018, says changes in policy, especially as it applies to milestone issues like parental leave after the arrival of a new child, have to happen for female employee retention to grow.

“I don’t really think the industry has been super progressive on issues of work-life balance, and really primarily on maternity and paternity leave,” Carps said.

“It’s really not enough to say, ‘We support working moms and we have a strong maternity policy.’ If you’re going to have women in executive roles, you need to also be supportive of working dads who might need to take time off because their wife goes back to work fairly quickly.”

That barrier between women and top commercial real estate positions will come at a cost both for individual companies and the industry as a whole, especially if other industries become more diverse and CRE lags behind, unable to provide the same perspectives as its business partners and customers, Molano, Hart and others say.

Low and Collins added that certain aspects of CRE make such policies imperative, like brokers’ reliance on commissions for so much of their income. Only 10% of brokers are women at Cushman & Wakefield, notwithstanding its diverse board and other initiatives, according to Low.

“There’s a lot of career-building that happens in your 20s and 30s, and that coincides with when many women are looking to have families,” Collins said. “Being away from your primary source of income for any period of time is difficult. That’s a challenge that we as an industry face and need to solve for, how we compensate and support those people early in their careers.”