Commercial real estate has a diversity problem. The people who buy, sell, and manage commercial real estate in the United States are overwhelmingly white and male, with women making up only about a third of the workforce and only 2% of C-level positions held by Black men. A new effort is aimed at changing that—and changing the kinds of investments the industry makes.
“The real estate industry is one of many industries in America that in the past year has come to the realization that it’s not as diverse nor necessarily as inclusive as the concept of the melting pot many of us learned about in school,” says Ken McIntyre, CEO of the Real Estate Executive Council, a trade association for commercial real estate professionals of color. “Many organizations have taken on diversity, equity, and inclusion initiatives over the past several years, and the net effect has been, let’s just say, less than optimal.”
To help those initiatives have a bigger impact, REEC has launched a new Diversity Partner Program, partnering with development companies, real estate groups, and other trade associations to set clear goals and guidelines for increasing diversity within their own ranks and for supporting vendor and supplier firms owned by people of color. The program’s first partners include global real estate firms such as Ferguson Partners and Nuveen, as well as the 19,000-member commercial real estate development association NAIOP.
Real estate is an industry that has long been linked with systemic racism, with race-based discrimination playing a role in everything from lending decisions to destructive urban planning projects to imbalances in the generational wealth tied to homeownership. For decades, the real estate industry has worked against the interests of people of color.
McIntyre says improving the diversity of the industry is good for real estate companies themselves but can also have a positive impact on communities around the country by having a wider range of people involved in decisions about what to build and where to build it.
“If a developer can make a lot of money building a luxury high-rise, they’re going to do that because their objective is to make money,” he says. “If that community would be better served with a health facility or a grocery store that was affordable, the people who might need that grocery store or that health facility generally aren’t involved in that decision.”
McIntyre says real estate companies with a more diverse makeup are more likely to better understand these kinds of community needs—and the kinds of voices that aren’t often heard when these decisions are being made. That can have benefits for communities, he says, but it can also be good for the profit-driven business of real estate. “Now all of a sudden you’re thinking about things differently, and you’re realizing that you can make money and also provide services and a built environment that improves peoples’ lives,” McIntyre says.
Part of the Diversity Partner Program is focused on setting clear and measurable goals for more diverse hiring above current levels at each of the participating partners. McIntyre says this is partly an internal challenge and partly an existential one for the industry, which has lagged in developing its pipeline of professionals beyond the male and the white. It has been an issue for decades. McIntyre says that when he started in real estate 30 years ago, the lack of diversity was stark. “It felt like the barrier to entry was much higher, but only because I really saw so few people of color when I joined,” he says. “It’s still rare, but it was even rarer 30 years ago.”
He says the industry should be better about communicating what it is and what it does, especially to young people who may have no exposure to anyone working in real estate. “We need them to understand that every building that you walk by, somebody owns, somebody manages, somebody built, somebody designed, somebody leased, somebody did the marketing plans for, and you can do any one of those things,” McIntyre says. “If we could get that on their minds, then we’ll start to at least have a chance for the pipeline to get fuller on all fronts, both with people of color and others.”
The Diversity Partner Program has its work cut out for it. McIntyre admits it’s going to be a long fight to change the industry from within and to groom younger generations to consider real estate as a viable career.
“There’s no quick solution. What we speak with our partners about is incremental wins. Where are you now and where do you want to be, what goal can you set that you think is achievable? Because every little bit, every little move helps,” he says. “So if we can get every firm to set goals that are above where they are today, then collectively we will see a truly massive aggregate change.”