On a steamy Friday in late July, hundreds of real estate professionals filled a Midtown event space to learn about opportunity zones, deal structuring, affordable housing and other hot-button topics. Also on the agenda for the two-day conference: a frank discussion about what it takes to succeed in real estate as a minority.
Diversity and inclusion have become watchwords across corporate America, but real estate remains one of the most homogeneous industries—especially in New York City, where connections are everything. Although women have made strides in the profession, its workers are overwhelmingly white.
The industry has taken a number of steps to diversify its ranks. In the past few years, real estate leaders have launched high-profile studies, internships and funding programs. Despite those efforts, some in the field say it still has a long way to go.
Blacks make up 4.6% of the commercial real estate workforce and hold 2% of senior-level positions, according to the Council on Urban Real Estate, or CURE, a New York–based nonprofit that promotes diversity. Women hold 9% of leadership positions.
The numbers would be problematic in any industry. (By comparison, in finance and banking, blacks make up 10% of the industry but just 2.7% of high-level positions, according the U.S. Government Accountability Office. Women hold close to 30% of senior roles.) But real estate has an outsize influence on the city, determining what is built and for whom.
“It has impact on communities, impact on livelihoods,” said Adeola Adejobi, founder of Avant-Garde Network, the career-development group for professionals of color that organized the Diversity in Commercial Real Estate event. It drew a crowd of 600 millennial-age professionals of color.
The issue cuts deep for many black Americans, given the legacy of discrimination, redlining and predatory lending that has prevented many people of color from owning a home, a key determinant of wealth. The average white household has more than eight times the wealth of the average black household, according to federal data.
Real estate also can create multigenerational wealth for those who gain entry into its clubby corridors.
“Real estate is one of those wealth-creation industries that could really help deal with the racial wealth gap,” said Tammy Jones, co-founder and CEO of Basis Investment Group, a commercial real estate investment firm.
Jones is among the most influential women of color working in commercial real estate in the city. When she was starting out, she was often the only woman and almost always the only black person in the room, she said.
The industry is, somewhat belatedly, scrambling to diversify. The Real Estate Board of New York, a leading industry group, last year declared increasing diversity a priority. It created a group to study the issue. And this summer it kicked off an internship program in partnership with the city that placed a diverse group of 46 young New Yorkers in paid summer internships with local real estate firms. REBNY appointed its first African-American president, John Banks, in 2014. (Banks retired from the position in June.)
Other groups have been more proactive. The Real Estate Associate Program has been exposing young minorities to the field and connecting them with a support network since it was founded here a decade ago. It has since expanded to other cities. More than 1,100 African- Americans, Hispanics, Asian-Americans and Native Americans have graduated from REAP Academy, a 10-week program that teaches the basics of real estate development and finance.
“We’re building the largest pipeline for diversity in commercial real estate in NYC and the nation,” said Osayamen Bartholomew, REAP’s associate program director.
Still, it’s a tough industry to break into for those without connections or capital. A key challenge for developers of color is obtaining funding.
“Not everyone can go to their parents and ask for a loan,” Adejobi said. Her conference aimed to provide access as well as highlight and connect people of color already working in the field. “It’s not a pipeline issue,” Adejobi said, gesturing at the packed room at the conference. “It’s more of an access issue.”
Some would-be developers, such as activist turned real estate developer Majora Carter, have gone out of state to gain experience. After losing a bid to redevelop a juvenile detention facility into a mixed-use space in her native Bronx, Carter is working on a similar concept in Indianapolis.
City officials are intervening. In 2016 the New York City Economic Development Corp. launched the Emerging Developer Loan Fund, a $10 million pilot program that provides low-interest loans to cover predevelopment costs and land acquisition for small to midsize projects. Such early funding is critical—and hard to come by for developers who are starting out or have limited equity. In addition, many banks will make loans only for larger projects, typically more than $30 million.
The Emerging Developer loans are up to $2.5 million and cover mixed-use, multifamily, industrial and commercial projects valued at $30 million or less. The program is not specifically aimed at minorities, but they have been among its key beneficiaries.
“Access to capital is synonymous with opportunity,” said Jones, whose company manages the loan program for the EDC.
The fund made its first loan in May 2017 for a 25-unit affordable residential development in the Morrisania section of the Bronx—a joint venture of minority-owned firms Apex Building Group and Silver Wave Equities. There are 51 loans under review, representing more than $51 million in financial need, Basis Investment Group said. To date the program has spurred more than $3.5 billion in development and created 1,160 jobs.
Basis also provides technical assistance and mentorship to help emerging developers craft loan packages and see a project through to completion. And if a developer is turned down for a loan, that’s not the end of the story. The goal, said Victor Amoo, a loan officer with Basis, is to develop long-term relationships and “let people know what they need to get to yes.”
The $10 million pilot program is a drop in the bucket. But it’s a start. As more people of color become interested in the field, they are finding more support—thanks to organizations such as REAP and CURE.
“There are more people of color doing things at scale than there ever have been,” said James Johnson-Piett, a founder of New York–based Urbane Development. One of the firm’s projects is Caton Flats, a Caribbean market and affordable-housing project rising in Flatbush, where Urbane is working with BRP Cos., a prominent black-owned developer.
“There is opportunity,” Johnson- Piett said, “but you still have to prove yourself in ways that a majority firm would not.”
Indeed, there is growing impatience among many minorities in the field. Don Peebles, chairman and CEO of Peebles Corp., resigned from REBNY’s board of governors in 2016 after two years, in part over frustration with the lack of effective action around diversity.
Jones says the industry has succeeded in identifying talent early but has lagged when it comes to supporting minorities midcareer. “We don’t do a good job of creating a sustainable opportunity,” she said. “We keep circling around the same strategies.”
At her investment group, Jones strives to support diversity. Three- quarters of her staff and 60% of her vendors are women or minorities. Basis has invested $700 million in loans and preferred equity (out of a total of nearly $4 billion) in women- and minority-owned real estate firms—underscoring what Jones says are plenty of qualified women and minority developers, construction managers and architects.
“It really bothers me when people say, ‘I can’t find any [minority professionals],’ ” she said. “We’re here.”