Exclusive: The DC Brokerage Diversity Problem That No One's Talking About
In 1982, Willard Freeman took the stage of a real estate banquet to accept an award for young brokers. But as he gazed out onto the ballroom floor he noticed something strange. All of the faces looking back at him were white — and the only other people of color in the room were waiting on the tables.
Thirty-five years later, not much has changed.
That moment "made it very clear to me I was in an industry that either didn’t recognize or expect women or minorities to be making significant inroads into the business yet," said Freeman, a trailblazer for DC brokers of color who began his career at Smithy Braedon before starting his own firm.
"What bothers me," he said, "is that it’s still painfully slow, and there’s still a resistance to it."
More than half of Washington, DC's population is black, Hispanic or Asian, but for decades, ethnic minorities have been dramatically underrepresented at DC's commercial real estate brokerage firms. Employment statistics show the issue is only getting worse.
The handful of minorities who have reached leadership positions at some of the city's biggest firms say they do not see enough effort from their employers to diversify their brokerage teams.
The Greater Washington chapter of the Commercial Real Estate Brokerage Association does not keep any statistics on diversity within the industry, they said, but the U.S. Equal Employment Opportunity Commission's 2015 survey identified 772 officials and managers in real estate, rental and leasing in Washington, DC.
Eighty-four percent of those surveyed were white. Of executive and senior-level positions — those who are leading large teams, such as executive and senior managing directors — surveyed, 96% were white. By comparison, 65% of officials and managers identified in DC's financial and insurance industry were white.
While not an exact picture of the industry — such data is not compiled on such a granular level — looking at EEOC's statistics over time shows that ethnic diversity has actually decreased over the last decade. The 16% of industry officials identified as minorities in the 2015 study was the lowest proportion since EEOC began surveying the industry in 2007, well below the 2012 peak of 21.4%.
Top African-American brokers in the industry can only count a handful of minorities who have reached senior positions at DC firms. In addition to the four we talked to for this story, JLL and CBRE each have one African-American broker at the level of vice president or above, whom neither firm would make available for an interview.
One of Freeman's protégés, Darian LeBlanc, has also gotten used to being the only minority in the room. It happens to the Cushman & Wakefield vice chairman on a daily basis, but it becomes more stark the bigger the room gets.
"When we go to our corporate symposiums and we get a significant percentage of our company together in a room, when you look out at the sea of faces," LeBlanc said, "the incredible lack of participation and diversity is undeniable. Nobody can argue that point."
African-Americans who have made it in DC brokerage said it was more difficult to break into the industry and climb the ladder because of their race. The industry is not overtly discriminatory, they said, but the way people are brought into firms and the difficulties they face in early years tend to give whites an advantage.
"You get in the industry by 'who do you know, does your family belong to country club, is your father a partner at a large law firm?' Those networks make the difference," said Jarvis CRE's Ernie Jarvis, who led CBRE’s DC office before starting his own firm.
The big brokerage firms typically hire people referred by brokers or executives at the company, favoring the privileged and well-connected. Many college graduates know little to nothing about the industry, so those who have family ties are much more likely to pursue commercial real estate.
For people of color who do make it into the industry, the first few years are undoubtedly the hardest. Most entry-level associates at brokerage firms make very little money — they work largely on commission — giving an advantage to those whose parents can help them pay the bills.
Brokers usually do not start making significant money until their third or fourth year, making it difficult for those who come from modest backgrounds. After starting off as a broker at The Bank Cos. out of college, LeBlanc switched over to the federal government when he got married and had children. He said he was not earning enough in brokerage to support his family.
"In order to be able to support yourself through that learning process, you need to be able to have financial means of your own," LeBlanc said. "The deck is clearly stacked against minority participation."
LeBlanc said he does not think the big firms, including his own, do sufficient minority outreach, both in the hiring process and in the critical early years. He said he has been vocal within Cushman & Wakefield and pushed it to improve, but has yet to see results.
"Everybody says the right thing and says 'yes we must do better, we should do better, we need to do better and how do we go about that?'" LeBlanc said. "And you sit down and script out a few things, and it just never gets done."
Cushman & Wakefield executive managing director Peter Carroccio, the firm's head broker in the region, said C&W is driving diversity and inclusion in the workplace and he is proud of those efforts.
"There is certainly more the industry as a whole can and should do," Carroccio said in a written statement. "It is an issue that deserves constant effort and awareness.”
Even for the success stories like Jarvis and Freeman, who climb the ladder at big firms and start their own brokerage firms, they still face disadvantages competing with their white counterparts.
Freeman, who started the Freeman Group, said he discovered this reality in 2009 when he was trying to do business with a Fortune 100 company in New Jersey, which he declined to name. To find opportunities, Freeman befriended a diversity officer within the company, who told him he was as talented as any broker they had seen.
Ultimately, he said the company decided it had to keep its business with the big firms, especially during the recession. In a frank conversation Freeman said he has kept confidential until now, the diversity officer revealed the true feelings of the company's leadership.
"The guy said, 'I’ve banged on every door where there might be an opportunity — legal, finance and senior leadership — and the response I got was ‘hey, we’ve got a black president now, what else do these minority companies want?’” Freeman said.
Those looking for solutions to the industry’s racial disparity do see reasons for optimism. What was once a predominately white male industry has increasingly opened its doors to women, who in 2015 made up 37% of industry officials and managers and 23% of senior- and executive-level positions, according to the EEOC study.
That progress, and the existing racial gap, can be seen by looking at CREBA’s board of directors, a volunteer group of DC brokerage leaders. The 23-member board includes eight women, but it has no people of color.
“The commercial real estate industry has historically not been very diverse, but it is changing,” CREBA executive director Mary Margaret Plumridge said. “CREBA’s president-elect, Elizabeth Cooper, sits on the diversity and inclusion council at JLL, where they have instituted numerous programs to recruit and retain diverse talent and most of our member firms have similar initiatives in place.”
To increase diversity within their ranks, brokers said firms should put greater resources into outreach and mentorship programs for young people.
Civitas managing principal Dennis Perkins broke into the industry in 1993 because of a diversity initiative Julian Studley implemented at his firm, since merged with Savills to form Savills Studley. After eight years at Studley, Perkins worked at Trammell Crow and CBRE before founding Civitas, but he said the mentorship he received in those early days was the key to his success in the industry.
“I was on a team where the leader made sure he was a supporter and a mentor to me professionally and personally,” Perkins said. “He made sure I stayed in the business and learned the business so I could go out and fend for myself.”
Jarvis, who had a similar path as Perkins, agreed with the need for more mentorship programs, but he believes real progress will not be made until clients begin demanding that service providers reflect the diversity seen in other industries and the community at large.
“Most companies have very thin diversity initiatives,” Jarvis said. “Until more clients start to challenge them, companies will pay it lip service but won’t really have to change unless clients demand we do.”