Commercial real estate has a whiteness problem

Imagine it is your first week of work at a large company. You are young, just-out-of-college, new to the industry, and are introduced to the leadership team and many of the senior professionals.

You quickly realize that there is not one Black person in the senior leadership; there is maybe one Black senior professional in the whole office out of a few dozen; and while you did notice more Black people around, eventually you realize that they are mostly support and administrative staff. They keep the office running by managing office operations down to cleaning out the coffee mugs everyone left in the sink.

Welcome to the experience of many people across the country in commercial real estate.

I do not mean to pick on commercial real estate as being villainous or even unique in its racial under-representation. We know there is a lack of diversity in planning, government, technology, finance, and nearly any other industry. However, I challenge this industry to have more introspection as to how we got here, and I don’t think I am saying things the industry hasn’t tried to talk about.

But in light of the unjust murder of George Floyd, the powerful protests across our cities, and a spotlight on systemic racism and injustices that Black Americans face, we have a duty to look around and listen today, now, and tomorrow. After speaking with Black friends and colleagues, reading, and listening, I determine that as a Hispanic-American man, I need to be a stronger and more vocal ally. I am compelled, here, to cast a mirror by saying things aloud that need to be said.

Under-representation by the numbers

Commercial real estate consists of companies that provide diverse services ranging from brokers who lease office space to project managers who help in a restaurant build-out. The three largest publicly traded commercial real estate firms, Jones Lang LaSalle, Cushman & Wakefield, and CBRE Group, have a market cap of about $34 billion today and the overall industry impacts our cities in terms of where businesses locate and where major investors buy and sell.

As a researcher I like numbers, so let us start with a few. I researched the leadership of today’s commercial real estate corporate landscape to find that the CEOs of the three largest publicly traded commercial real estate firms are all white men. The same three companies have 39 corporate officers among them who are listed as their global executive leadership teams, and only two of them (5.1%) are Black.

In my backyard of Washington, DC, a city of tremendous diversity and a rich Black heritage, the Commercial Real Estate Broker’s Association of Washington, DC (CREBA) awards top real estate professionals every year at an impressive banquet. In 2019, 44 individuals received an award for their excellence in local commercial real estate, and not one of them was Black.

Go ahead and check out the photos of that event with a keen eye to diversity. I also challenge you to run the same numbers with your corporate board members, local leadership groups, awards ceremonies in your city, and the “top sales people” poster near your water cooler to see if the results are any different. I will take the odds that they are not.

The white sociology of sales and brokerage

Commercial real estate’s whiteness problem does not necessarily stem from pernicious evilness and overt discrimination  —  although the ghosts of real estate’s racist past are still with us  —  but it is more about the underlying sociological systems that underpin the industry and how those social systems revolve around the legacy of white social networks. Those social networks are self-perpetuating, and you should think critically about them and how they can lead to social exclusion.

Some critical questions:

• How many sales opportunities go further based upon trivialities like who went to the same private high school as someone else?
• How many professional deals happen from activities that have a tendency to be exclusive, like country club and golf social networks, or “getting out on the boat?”
• How much nepotism, or how many parent-child pairs exist in your office, and how do you think people of color perceive them?
• How often are professionals inviting their Black peers to business lunches and happy hours with prospective clients?

Brokers and salespeople will use their social networks to their advantage, and I won’t blame them since relationships are the core of successful sales. The success of the commercial real estate broker exists between his (and it is most likely a him) relationships with mostly white people who happen to own an office building, or who happen to be a decision-maker at an organization wanting to lease space.

However, this becomes a whiteness problem when those white-centered social networks perpetuate and manifest in who gets opportunities. This exacerbates when brokers, and their leadership, do not make conscientious effort to distribute opportunities to underrepresented groups, especially Black professionals.

Again, look at the poster of top sales people in your office and think, is my office really the meritocracy I thought it was? I am afraid if your instinct is to put the onus on Black professionals’ lack of representation on that poster back onto them, or their “hustle” or work ethic, you need to reconsider how you’re thinking about Blackness in American society.

For the sales person ultimately wants to please his client, but one might make the mistake of allowing implicit bias to impact the formation of a brokerage or sales team. Research shows that the race of the buyer or client influences their perceptions of a salesperson’s credibility and likability. Implicitly, teams may be formed around such catering. What I mean is that an organization might form a team of mostly white brokers because they have previously been successful, and this pattern self-perpetuates.

Meanwhile, Black brokers can be excluded, not given sufficient opportunity, or often placed into a niche to service Black clients or assets in Black parts of the city. We all hope this is not an overt pattern of racism  —  and I do not believe it to be so  —  but the evidence of the effects of these white-centered social processes exists on that poster near your water cooler.

A Bisnow piece on “What does it mean to be black in CRE?” is insightful and revealing of Black voices. One Black professional in real estate reveals: “a team of two whites pitching an assignment will have a much greater chance of being taken seriously vs. a team of two blacks, regardless of the latter team’s capabilities.” Even worse, Blacks in real estate exist in a professional culture that diminishes their identities — their Blackness — and disallows them to be their authentic selves. As another Black person in the industry mentions, “African-Americans generally take on a second personality in order to fit the corporate culture they want to thrive in.”

A team of two whites pitching an assignment will have a much greater chance of being taken seriously vs. a team of two blacks, regardless of the latter team’s capabilities.

- Male | 35 years old | Brokerage | Chicago

And yet, we look around and wonder why have Black people not thrived in commercial real estate? And yet we wonder, why such a lack of representation?

For those who want to move forward, there are some steps we can actively take to make progress. Much more has been written on this, and I simply want to offer my views from a perspective of my background as a student of public policy, organizational theory, and urban sociology.

Challenge the hiring process

Commercial real estate is especially prone to existing social networks not only in sales and brokerage, but in the attraction of professionals. Research shows that the hurdles people of color face in getting hired are not so much being qualified for the job or not, but more often the hurdles are finding out about the job to begin with. Often white peers with white social networks find out about opportunities first.

We need to challenge our organizations to be more active in re-evaluating the hiring process. This includes actively seeking Black candidates through other networks and postings besides the usual. This might include actively recruiting at historically Black colleges and universities, socializing job postings with local African American business groups, or any other pertinent networks you can think of. The point is that the existing recruitment and hiring systems are insufficient and need to be re-evaluated.

Often, this can include asking underrepresented employees in your organization to please circulate job postings within their social networks. It can also include making sure that your leadership actively creates spaces where underrepresented groups can be heard, and where leadership listens with heightened empathy and an ear towards action.

Early in my own career, an organization I worked for took action to have diversity mandates for interviewed candidates. Teams typically interviewed six candidates in person for a position, and leadership prohibited teams from moving to the interview step unless the pool of interviewees exhibited some diversity (read: you can’t just bring in six white dudes). The burden would have to be on the team to prove they were totally incapable of finding one person in the world to interview who wasn’t a white guy. Unsurprisingly, no team ever tried to push this issue and we had much more diverse and successful candidate pools as a result.

Actively include Black professionals on teams

This seems simple enough but it can be difficult in an organization that believes in a myth of meritocracy. Sales and brokerage are services where success perpetuates success, but that can also have a strong racial correlation for all the institutional reasons we know.

Apply a keen eye to how often Black (and other underrepresented groups) get an “at bat” on a project or pitch, especially the larger ones. Critically question who the senior professionals decide to add, or not add, to their team. Also talk to (and listen to!) underrepresented groups through various forums such as their company network groups, or establish leadership-attended town halls. These voices are there, wanting to be heard, and we need to listen.

Market players: Ask for underrepresented professionals!

If you are an owner of a real estate asset or a prospective tenant, stop. Think. Take a critical approach to your relationship with your commercial real estate brokerage firms and demand diversity. If you’ve favored the same broker for years, we all get it, your kids play baseball together and things like that. What you can do is also ask that the associates on a lease or deal have more diverse faces. Have these frank discussions with the brokerage professionals you know.

If a company sends you a team that looks like the same profile of the same white faces, you need to know that the commission will go to those professionals and not others. Pick up the phone and challenge the leadership at the local office; trust me, they know better than to not listen if deals are on the line. Ask for a different team, or take active steps to hire teams that have put underrepresented groups forward. This should be part of a broader organizational strategy of encouraging diversity in the firms your organization hires for professional services like accounting, marketing, and law firms.

When you make a choice with diversity in mind, and teams lose because they did not listen to your desire to see diverse teams, let the losing teams know why they lost. You have market power that can do good, so you should use it.

Promote under-invested communities

If you are a broker steering clients to properties, make a keen effort to not engage in implicit “racial steering” whereby you steer clients towards properties in one part of town and not another. People are prone to do this not because of overt racism, and they may simply be responding to a client’s wish list. Nonetheless, we should know that implicit bias is at play and we all need to broaden our understanding of patterns of unequal development and how many individual small choices result in geographic inequalities. Broaden your view of your city, and really dig deep to question how well you are considering properties in under-served communities.

Many prospective clients, especially tenants, may be new to the market and not carry the same geographic biases as those who’ve lived in the same city for a long time. Every deal is an opportunity to actively ensure suitable properties in under-invested areas get a chance to be seen. Try to ensure at least one property you show is in such a community as this will help steer investment towards areas that need it. With programs like Opportunity Zones and Enterprise Zones, your client may actually benefit from various government incentives, too. One lease may seem small, but it adds up by equitably sharing the prosperity of a city across more communities.

Onward

Inclusion and listening to more diverse voices isn’t just the morally right thing to do. It also improves organizational performance. Researchers speak of “diversity dividends” where organizations perform better when more diverse faces are in the room. And yes, this includes the diversity of leadership and boards, so it is insufficient to have diverse faces only playing supporting roles in the office support departments. They need to be part of the core organizational mission, and for commercial real estate firms that means brokerage and sales.

A step we all can take as individuals is to listen to our Black peers, to reach out to people we probably don’t spend as much time interacting with, and spark these conversations as we broaden our view of a successful team to not just consist of the same faces from the same networks.

Let’s all do better to heal, try to continually listen to one another, and make choices that advance the opportunities of others. We all come together at the grand American water cooler to talk and laugh, and that place should reflect and celebrate our diversity and differences instead of reminding us of it.

Illustrator’s bio: My name is Therrious Davis, but I tend to go by my nickname Therro. I am an Illustrator and a recent graduate from the Memphis College of Art. I like to tell stories and create work that range from themes of nostalgia and spirituality to pop culture and politics. @TherroTheKid