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Unsurprisingly, the upper echelons of the commercial real estate industry have been populated by people of European descent. For a time more diverse representatives were put on the rise thanks to affirmative action and attempts to eliminate the glass ceiling for women, but now there is an actual need for diversity and it is showing in the change in leadership at the highest levels of the business. More than one-third of the U.S. population now has non-white backgrounds and forging new business connections with them is necessary for success now and in the future. For more on this continue reading the following article from National Real Estate Investor.

The commercial real estate industry has not historically been known for its diversity. But the make-up of the business is slowly changing, and not just at entry level. Today, the industry can point to such high-profile executives as Sandeep Mathrani, CEO of regional mall REIT General Growth Properties; Debra A. Cafaro, CEO of Ventas Inc., a seniors housing and healthcare REIT; and Constance B. Moore, president and CEO of multifamily REIT BRE Properties Inc.; as proof that the business is no longer run exclusively by white men.

In part, this is due to evolutionary forces. While in the past some companies might have pursued workforce diversity because it was a worthy cause, it has now become a matter of necessity. Today, people of non-white backgrounds already constitute more than a third of the country’s population, according to the U.S. Census Bureau. By 2050, they will become a majority. Women make up half the population and are the primary decision-makers for their households when it comes to new purchases.

If commercial real estate professionals want to understand the needs and wants of a very large segment of their customers the industry needs to reflect the broader demographic trends.

“No one can dispute that women and people of color are underrepresented in the senior leadership ranks of commercial real estate companies,” says Cory Cancila, senior vice president of human resources with Equity Residential, a multifamily REIT headquartered in Chicago. “And I don’t think there is anybody who disagrees that in business you want different perspectives and diversity of thought and that you get that by having a diverse workforce.”

Plus, women and people of diverse backgrounds can bring new business in by forging connections with clients that might otherwise not take place.

Real estate services firm Jones Lang LaSalle, for instance, recently won a contract with a woman-owned business partly because the firm’s executives were impressed that at negotiation meetings so many of Jones Lang LaSalle’s executives were women, according to Margaret Caldwell, managing director of retail capital markets with the Chicago-based firm. In 2002, Jones Lang LaSalle had 857 full-time female employees in the U.S. Today, it employs more than three times as many: 2,648. (However, the percentage of women employed at the firm has dropped from 43 percent to 38 percent.)

Insights like this have become the impetus for many real estate firms to step up efforts to recruit and retain both women and people of different races and ethnicities in their ranks.

In the past, the fact that many commercial real estate services firms were family-run organizations, coupled with a dearth of formal programs for real estate education at university level, made the industry unattractive to outsiders. In a male-dominated industry, women also alleged they were treated as support staff and faced sexual discrimination, according to lawsuits filed as recently as this decade.

In 2012, only two commercial real estate companies made Diversity Inc.’s Top 50 Companies for Diversity list, both of them in the hospitality space. Marriott International came in at number 21. Starwood Hotels & Resorts took spot number 32. A total of 587 companies participated in the study, which looks at CEO commitment to diversity, workforce diversity, corporate resources for mentorship and diversity of the companies’ suppliers, among other factors.

Historically, when a woman, an African-American, an Asian-American or a person of Hispanic descent entered the profession they felt isolated. There were few people like them among leadership ranks that they could look up to, and few people they could network with who shared similar backgrounds, according to Adam C. Weers, principal with the Trammell Crow Co., a real estate development and investment firm headquartered in Dallas.

“My personal opinion is that, at least on the development side, a lot of hiring is about networking and getting to know people and them feeling comfortable with you,” says Weers, who is African-American. “And a lot of times people are more comfortable with folks who look like them, people they have similar backgrounds with. It can be more impactful in an industry like ours because [hiring] is a lot more about fit and feel,” rather than just credentials.

Lisa Konieczka, executive vice president of brokerage services with CBRE, who founded the firm’s Women’s Network in 2000, notes that when she started her career as an analyst at the Rubloff Co. in 1987, she was far more concerned with commanding respect as a 22-year-old recent college grad than as a female commercial real estate professional. She did not feel her gender was a deterrent.

After a few years, however, she started to take notice of the fact that she was the lone woman going into meetings. She felt it was important to make sure that women had a chance to network with other women in the industry, to know that their voices should be heard and that they could eventually achieve positions of prominence. That’s one of the reasons she helped create the Women’s Network. Since its inception, the number of participants in the network has grown from 35 to 330, Konieczka notes. She adds that during the network’s first few years in existence, when she got calls referring someone to the program, typically a male professional was the one making the recommendation. Today, it’s just as likely to be a woman.

In fact, the commercial real estate industry has made greater strides toward diversity in the last decade than it had for several decades that came before, according to ICSC CEO Michael P. Kercheval. Today, almost half of ICSC members under 35 years of age are women, he notes.

“I think that the days of women being excluded from the decision-making process just because it was a clubby environment are behind us,” Kercheval says. When it comes to both women and people of diverse backgrounds, “it’s rare that a company is going to discriminate. More often, companies are eager to get diversity, but until you get women or people of different racial and ethnic heritage in senior positions, it’s hard to get other people to see it as a possibility. I have a daughter who’s in college and I think she’s relatively typical of career-minded women—she sees the most opportunities in industries where there are more women.”

Today, as more universities around the country offer degrees in commercial real estate and many real estate firms have created mentoring and networking opportunities for women, African-Americans and other affinity groups, the industry is becoming a place where such opportunities exist. But there is still a long way to go before the commercial real estate industry can be declared truly diverse, according to Mary Peralta, program administrator with the Ross Minority Program in Real Estate at the University of Southern California (USC).

“If you attend conferences, if you go to RECon or ULI events, it’s still very much a white, male-run” universe, Peralta notes. “We have a good amount of diversity in other professions, but for some reason in real estate development and commercial real estate, it’s still not there. It might be a feeling of ‘It’s not something that I understand or that I want to get into.’ So we need to change that mindset.”

In addition, “there has not been an industry-wide acknowledgment that we need to bring more [diverse] people in,” adds Eric Yarbro, senior vice president of global corporate services with CBRE. Yarbro founded the firm’s African-American Network in 2003. Efforts to increase diversity among real estate professionals have been “case-by-case and company-by-company, not industry-wide,” he says. Partly, it’s because “there hasn’t been a mandate from the end users that this is what they want to see.”

On the radar

Education has been one of the most important tools for bringing diversity into the real estate industry, according to James D. Kuhn, president of Newmark Grubb Knight Frank, a commercial real estate advisory firm, and chairman of the advisory board at New York University’s Schack Institute of Real Estate. As much as commercial real estate companies may want to hire a range of professionals from different ethnic and cultural backgrounds, they need to have a wide pool of qualified candidates to choose from, he notes. And until recently, real estate was not even offered as a major at most universities, which meant that people who had not grown up in the industry were often not aware it was a viable career choice.

Today, 54 universities in the U.S. offer bachelor’s degrees in real estate and 22 offer master’s degrees in the subject, according to myplan.com, a data provider on colleges and universities.

There are also a few university programs that put the focus specifically on training women and members of minority groups in commercial real estate, according to Peralta. These include the Schack Institute and USC’s Ross Program.

In 2008, for example, Kuhn and his wife, who met through Schack, created a $1 million endowment for the institute to support the James and Marjorie Kuhn Program to Foster Diversity in Real Estate. The program puts an emphasis on recruiting and mentoring students from different ethnic and racial backgrounds.

So far, Schack, which has not previously offered scholarships, was able to provide one to an existing student based on diversity, thanks to the Kuhns’ gift. Starting next year, the institute will start offering partial scholarships to new admissions who meet its academic and diversity qualifications, according to Rosemary Scanlon, divisional dean.

“I felt that since NYU is one of the largest programs in the field, if they can diversify the student pool in their real estate master’s program, it would be easier for the industry to find good [job] candidates,” Kuhn says. “It provides a pipeline for the industry to have qualified candidates right here in New York and shows a commitment [to diversity] from a major real estate company.”

Similarly, USC’s Ross Minority Program in Real Estate trains people from diverse backgrounds to become leaders in real estate finance and development. Part of the university’s goal is to equip real estate professionals and community leaders with the skills necessary to redevelop underserved communities.

The program started back in 1993 as a summer in-residence two-week training program. In 2004, USC expanded it to include a commuter program during the winter semester. As the program nears its 20th anniversary, it has trained nearly 700 participants, according to Peralta. It counts among its graduates Renata Simril, managing director of the public institutions group at Jones Lang LaSalle, and Michael Banner, president and CEO of Los Angeles LDC, a firm that provides capital to foster development in distressed neighborhoods.

Commercial real estate companies have also been putting more effort into reaching out to schools that have historically educated African-Americans, including Howard University in Washington, D.C. and Spelman College in Atlanta, and to ethnic and racial organizations on other campuses when they are recruiting new graduates.

For example, Adam Weers notes that Trammell Crow historically has sent its recruiters to five different business schools around the country to scout for potential hires. When Weers, who attended Morehouse College for his undergraduate degree and Harvard University for his MBA, makes the trip to Harvard on behalf of Trammell Crow, he makes sure to contact the African-American student union there to let them know he’s searching for job applicants. His colleagues who go to other campuses do the same.

Weers adds that during the past 10 years, the percentage of new MBA hires at Trammell Crow who are either women or members of other affinity groups has been above 20 percent—a rather high number.

“We already hire whoever is the best person available, but with diversity outreach, you have more people in that pool,” he says.

Plus, industry associations, including the Institute of Real Estate Management (IREM) and Commercial Real Estate Women (CREW) Network offer scholarships and additional training to help people already in the industry achieve necessary accreditation and improve their professional skills.

IREM, for instance, awards scholarships that go toward obtaining Accredited Residential Manager and Certified Property Manager designations. The out-of-pocket costs for attending the necessary classes for the designations can be as much as $3,000, according to Jae Roe, chair of IREM’s diversity advisory board and senior property manager with First Potomac Management. IREM also awards scholarships to its members who come from diverse backgrounds to attend national conferences where they participate in educational sessions and network with other industry members.

And CREW offers scholarships starting at $5,000 to women getting an education in commercial real estate. After graduation, CREW also provides its scholarship recipients with summer internships at industry firms and a 12-months enrollment in its eMentoring program.

Then there is the Real Estate Associate Program (REAP), which is closely affiliated with ICSC, ULI, NAIOP and BOMA and is sponsored by companies including Simon Property Group, Westfield, Macerich, Forest City Enterprises, CBRE and Jones Lang LaSalle. The first REAP chapter launched in Washington, D.C. in 1997. It was followed by chapters in Atlanta, New York, Chicago and Los Angeles. Approximately 500 people have participated in the program to date, according to Gregg McCourt, executive director.

REAP recruits and trains professionals that come from diverse racial and ethnic backgrounds and are in the midst of changing careers to join the commercial real estate industry. Over a 13-week period, REAP offers 26 classes that cover topics ranging from property valuation and financial analyses to leasing and property management. Commercial real estate firms then hire professionals directly out of the program. Today, approximately 70 percent of REAP participants are African-Americans, followed by Hispanics and Asian-Americans, according to Kercheval.

Approximately 10 to 15 percent of program graduates go on to either get their first job in commercial real estate or advance in their career if they already work within the industry, McCourt says. The rest may enter the program purely to further their education, or else they find that there might be a shortage of jobs in the field they want to pursue, he adds.

Welcome wagon

Once people find their first jobs in the industry, some firms put a substantial amount of effort into providing mentoring services and networking opportunities to make them feel more comfortable, create greater business development opportunities and introduce them to all the different career paths available within the world of commercial real estate. (While asset management and property management departments at many firms are fairly diverse, brokerage groups continue to be predominantly white and male because of the difficulty of getting through the first few years in a commission-based business, according to Kuhn.)

Networking circles like CBRE’s African-American Network Group and the Women’s Network help women and people of diverse backgrounds get ahead in their careers by creating more opportunities for them to close deals.

In the commercial real estate industry, new deals come together through existing relationships, according to Eric Yarbro. If someone enters the business with few or no professional contacts it’s a challenge to get ahead. He founded the African-American Network after meeting three other African-American professionals with about the same level of industry experience that he had at CBRE’s West Coast conference in 2003 and realizing none of them even knew the others existed. Over the past nine years, the network has grown from its initial four members to 400 members today.

The network focuses on recruitment and retention, as well as business development and career advancement. Every year, it evaluates its success through the number of significant assignments its members have worked on, revenue they’ve generated and promotions.

“If we win a contract with a large corporate client, as we just did with one of the largest insurance companies globally, we present the fact that when we distribute the business to our professionals around the country some of that business will go to minorities,” Yarbro says. “And that means those [professionals] in those markets will now have on their resume working with one of the largest insurance companies” in the world.

Last fall, Jones Lang LaSalle held its first annual Women’s Summit, a two-day event that hosted 50 of the firm’s female professionals in management positions and addressed strategies to help women advance their careers.

Part of the firm’s Diversity and Inclusion Initiative, the event’s goal was to connect its top-performing female employees. Jones Lang LaSalle also works closely with CREW on its annual convention. Attending events such as these helps women network with each other, as well as provide them with opportunities to bring more business for their firms because they are often the first to hear about new projects and deals happening at other companies, says Caldwell.

And to continue to improve recruitment and retention of women and other affinity groups in the commercial real estate industry, many firms, including Equity Residential and Trammell Crow, have set up diversity advisory boards and diversity councils. Made up mostly of volunteers from the pool of existing employees, these boards advise company leaderships on how to improve diversity outreach.

“Every year we get about 50 applications for 14 spots,” on the diversity council, says Cory Cancila, of Equity Residential. “Council members get together once a month to make sure we don’t have any obstacles against an inclusive workforce. One thing that came out of the Council is the development of a full-day course [on diversity] that’s required for managers and advised for employees.”

“One of [council members’] main responsibilities lately is to take it back to their region,” she adds. “There are different team-building exercises they can facilitate, one person started a newsletter [about diversity] for their region, one person developed word cards in multiple languages for things normally found in an apartment, so if a maintenance person goes into a building where someone doesn’t speak English at least they can start a conversation and determine what the issue is.”

It’s all about making connections, after all.

This article was republished with permission from National Real Estate Investor.