IllinoisCRE Confronting CRE’s diversity problem Matt Baker June 4, 2020 Share on Facebook Share on Twitter Share on LinkedIn Share via email The tragic death of George Floyd on May 25th has laid bare a truth that most of us already knew, even if it has been convenient to ignore—that systemic inequality still runs deep within American society. This is particularly true of commercial real estate, which remains an industry predominately composed of white males. In the wake of the protest following Floyd’s death, many organizations have issued official statements in solidarity with inclusionary ideals. While it’s important for corporate America, in whatever format it takes, to declare a position, effecting change is impossible without further steps. Collete English Dixon “This isn’t new stuff. We go through these cycles seemingly every few years,” said Collete English Dixon, executive director of the Marshall Bennett Institute of Real Estate at Roosevelt University. “So, this time what can we do differently? That is more important. The statement is fine, but let’s talk about action.” When it comes to commercial real estate, there remains considerable homogeneity. A systematic review by NAOIP found that, nationwide, black men account for 1.3 percent of senior executive jobs within the CRE industry; non-white women hold less than 1 percent of these positions. Though it may be difficult for CRE firms to break free of their inertia, they are highly incentivized to do so. Study after study shows that better diversity and inclusion (D&I) within a company leads to improved performance. That’s true of every metric, including the one that companies respond to the most: profitability. A report released last month from McKinsey & Company looked at more than 1,000 public companies in over 15 countries. Their data shows that the more ethnically and gender-diverse a company is, the better its performance. The top quartile of companies for racial and ethnic diversity were 36 percent more likely to have superior financial performance. “If having different perspectives, different experiences, different life knowledge helps you as a company be better at the decisions that you make, why not do it?” said Dixon. “If inclusive workplaces and inclusivity of talent make you more successful, what’s the trip hazard here? There isn’t one.” With that in mind, what steps can leaders take to improve D&I within their organizations? It starts with establishing tangible goals. Dixon points out that companies have taken pledges over the years to address female leadership, sustainability and other progressive principles. Pledging to hire more people of color establishes a very clear benchmark, one that companies would be more likely to attain. “It’s about meeting people where they are and trying to understand the challenges that black and brown people have faced in the real estate industry,” said Dixon. “This is an opportunity for the industry to say, ‘We get it. We haven’t done well at it, let’s do what we can. This is how we’re going to do it and these are the goals that we’re going to achieve.’” Another step is to broaden recruitment efforts, opening up outreach to include HBCUs and schools that have diverse populations of students. Scholarships, mentorships and internships can bring these job opportunities to a wider scope than ever before. Joe Smazal Joe Smazal, senior managing partner at Interra Realty, has committed himself to being part of the change. He recently announced that he would devote a minimum of one hour per week this summer to teach the fundamentals of real estate to Chicago’s youth. He will walk with the young person, through a neighborhood that is convenient for them and their guardian, and discuss the ins and outs of the industry on a level that they can comprehend. “The idea is to expand the exposure of real estate, or at least pique the interest of people that otherwise might not have been exposed to it,” said Smazal. “There are a lot of people who have the skill set and ambition that might lead them to be very successful in real estate but it might not be something that they would otherwise have an opportunity to pursue.” To increase the success of this endeavor, Smazal has reached out to friends and colleagues in his network and is in discussions with non-profit organizations that already have roots in the neighborhoods that he wants to target. “This is a good idea, but the last thing I want to do is over-promise and under-deliver,” Smazal said. Commercial real estate is unique in that the nexus around which the industry revolves—office, retail, industrial and multifamily buildings—make up the tangible reality of our neighborhoods. It is incumbent on CRE firms to concentrate not only on the diversity within their firms, but how their business activities impact the real world. “It’s important for the industry to find opportunities to bring meaningful economic development into challenged communities,” Dixon said, “to incorporate community members in their projects so they own what’s going on, and are committed to their success, just as much as the companies are.” In the end, that may have just as profound of an influence over societal inequality as improving a particular company’s diversity. Increasing the opportunities for people of color to lift themselves out of inequity is a noble effort. Leveling the playing field so that certain groups aren’t in need of that uplift can be a powerful agent for change.