Making CRE More Diverse Will Be A Challenge
In the wake of the civic unrest after the death of George Floyd, people of color are pressuring commercial real estate companies to match their talk about providing opportunities for minorities with actions.
The road ahead, though, isn't easy given the sector's demographics and corporate cultures.
In 2013, 77% of the industry's senior executives were white men, 14% were white women, 3% were Latino men and 1.3% were Black, NAIOP data shows. The study also found that midlevel white male managers have a 1 in 3 chance of being promoted to senior positions. Black females have a 1 in 12.6 chance. About 1 in 6 Latino men and 1 in 6 Latino women moved to their companies' upper ranks.
"Commercial real estate, particularly brokerage and advisory services, is very much a friends and family business," SVN - The Concordis Group Managing Director Brian Edmonds said in a July 9 Bisnow webinar titled Mentorship & Diversity in the CRE Industry.
"If you look across the landscape and talk to folks, you find out that's how many people got into the industry."
Not having existing connections puts people of color at a disadvantage when they start a business and makes it harder for them to grow it.
For instance, Philadelphia developer Leslie Smallwood-Lewis and her partner Gregory Reaves cashed in their 401(k) accounts when they founded Mosaic Development Partners in 2008, a risk they needed to take because they had no other way to raise funds for the capital-intensive business.
"Traditionally, people of color do not have that legacy of generational wealth," she said. "You immediately see the distinction between what you are capable of doing and what other companies are capable of doing."
Smallwood-Lewis got her start in the CRE industry in 2001 with the Goldenberg Group. At the time, the firm had no other Black employees and the company wanted to curry favor with Philadelphia's then-mayor, John Street, who also is Black.
"It was a mutually beneficial relationship," she said.
One key to boosting the foothold of minorities in commercial real estate is through mentorships and partnerships with less experienced developers.
Many people in the minority community aren't familiar with the CRE industry, Edmonds said. Just hiring people without any background in the sector can be problematic if they aren't paired with mentors who can show them the ropes, he said.
"I think it's incumbent on the management of a company to pair young talent with more seasoned talent."
BFW Group CEO Blane Stoddart is looking to hire a professional engineer to help run his construction management company so he can devote more time to mentoring.
"They don't have to be a minority," he said. "We are already diverse. They can be Caucasian."
CBRE, the largest commercial real estate services firm in the world, in late June named Tim Dismond as the firm's chief diversity officer. According to Mullen, the company allows him to develop a strategy that works best for the Philadelphia market.
Diversity isn't charity or only valuable in making a company look good. Studies have shown that firms that participate in diversity are twice as profitable as those that aren't, Stoddard said.