As commercial real estate slowly moves toward a future where the industry better reflects the community, what can facilitate change?
The topics of race and diversity in the U.S. have taken center stage in our national conversation, with many companies emphasizing diversity, equity, and inclusion initiatives in recent years. It seems only fitting to shed light on the topic of diversity — or the lack thereof — in commercial real estate. CRE has long been viewed as a male-dominated profession for the well-versed and sophisticated. While demographics within the CRE profession have started to shift, are they changing quickly enough?
The composition of the workforce has historically been predominantly older white men, with minority populations rarely seen in prominent commercial brokerage roles. Additionally, women were often found only in administrative, assistant, and property manager positions. Actual day-to-day transactions and top-tier roles seemed to be reserved for men with the lightest of hues. Perhaps these gender and racial disparities are what prompted America's largest trade association, the National Association of REALTORS® (NAR), to take a closer look.
Looking at the Numbers
The National Association of REALTORS® Research Group conducted a sociodemographic survey of members within CRE in 2018. According to the “2018 Commercial Member Profile,” the median age of NAR's commercial members is 60 years old with roughly 30 percent being 66 years or older. Women, meanwhile, accounted for 30 percent of the commercial member snapshot. The percentage of women in the industry has steadily grown over the past five years, with 62 percent of the women specializing in non-sales-related primary services. Men, interestingly enough, still dominate the primary service of property management, making up 57 percent to women's 43 percent.
While the NAR survey did not address race or the ethnic makeup of its members, its 2017 report, “Choosing a Career in Real Estate: A Perspective on Gender, Race, and Ethnicity,” touches briefly on these topics. The study was conducted in part due to several multicultural organizations — such as the National Association of Real Estate Brokers (NAREB), the National Association of Hispanic Real Estate Professional (NAHREP), and the Asian Real Estate Association of America (AREAA) — requesting an analytic look into the race and ethnicity profiles of all NAR members. This report showed that 74 percent of the respondents were white, followed by 13 percent Hispanic/Latino, 7 percent Black/African American, 6 percent Asian/Pacific Islander, and 2 percent American Indian. Respondents could choose more than one category for race. Of the white members (both men and women), 12 percent worked in CRE exclusively, while all non-white members combined who exclusively practiced commercial made up 3 percent or less.
If everyone stays conscious of the issue and committed to the empowerment, development, and advancement of women and minorities in CRE, the industry will better reflect the society we serve.
There was also a large disparity in the report when comparing men and women who worked exclusively in CRE, with men accounting for 15 percent and only 4 percent women. Keep in mind the 4 percent of women is spread across all CRE service types, such as property management, consulting, leasing, brokerage, etc. Unfortunately, NAR was unable to drill down any further on the gender and/or ethnic makeup of members working in CRE due to the small survey size of CRE professionals. With minority populations making up roughly 28 percent of all real estate professionals, only 3 percent are working exclusively in CRE. Considering these numbers, it's safe to say that minorities and women are underrepresented in the industry. To take it a step further, minority women in brokerage are grossly underrepresented in the industry. This is in spite of the fact that even American Express, in its “2019 State of Women-Owned Businesses Report,” found that Black-owned businesses make up 50 percent of all women-owned business.
Change Is Coming
The industry has started to see more women and people of diverse backgrounds emerging in brokerage and executive roles in top retail chains. In 2018, Marvin Ellison left his role as CEO of J.C. Penney to become the new CEO of Lowe's, making him one of only four Black CEOs of Fortune 500 companies. In 2019, Javier Rodriguez became the CEO of DaVita, making him one of 16 Hispanics to lead a Fortune 500 company. Earlier this year, Walgreens recruited Starbucks's COO, a Black woman by the name of Roz Brewer, and appointed her CEO of Walgreens Boots Alliance. At RLJ Lodging Trust, Leslie D. Hale is the first and only African American woman to hold the position of CEO of any public real-estate investment trust (REIT).
These industry advancements have been a long time coming. According to the U.S. Census Bureau report, “Demographic Turning Points for the United States: Population Projections for 2020 to 2060,” by 2030, all baby boomers will be well into their golden years at over 65 years of age. Population growth is projected to be primarily driven by immigration and less by increasing birth rates. Individuals of two or more races will make up the fastest growing demographic segment in the country, with whites no longer a majority by year 2045, resulting in a more ethnically and racially pluralistic landscape.
While many companies promote diversity on their company website and marketing efforts, fewer are as intentional in following through with efforts necessary for real change. Diversity and inclusivity should be at the forefront of every organization. Different perspectives, experiences, and skills can create a framework for creative thinking and innovative ideas. Ideally, a diversified workforce also increases productivity, which in turn creates more jobs.
All REITs, brokerages, and CRE firms should examine their business operations and ask themselves if they are ethnically and racially diverse. If not, changes should be made immediately.
All REITs, brokerages, and CRE firms should examine their business operations and ask themselves if they are ethnically and racially diverse. If not, changes should be made immediately. If the answer is yes, the next step is to determine how to continue the advancement of diversity within the organization. Companies can promote diversity and inclusivity in several ways. Organizations can assist those who have been excluded or marginalized by opening the path to management early in their career. Other steps include:
- Creating mentorship programs.
- Implementing diversity-driven hiring and promotion policies.
- Hiring executives from various backgrounds.
- Creating a diversity partner program.
- Allowing time off for cultural and religious holidays.
- Hiring a diversity expert.
CCIM Institute, in 2002, established the Cultural Diversity Education Program with the explicit goal of aiding in the advancement of underrepresented groups in CRE through professional growth and education. Qualified applicants are awarded discounted rates for all core courses required to achieve the prestigious CCIM designation. To date, more than 1,500 students have participated in the CDEP program and completed one or more courses. Many have continued on to receive their CCIM designation.
Let's face it — this isn't the first article to shed light on the lack of diversity in CRE, and it won't be the last. While change is happening, the pace is painfully slow. But if everyone stays conscious of the issue and committed to the empowerment, development, and advancement of women and minorities in CRE, the industry will better reflect the society we serve. One day, CRE will truly be reflective not of the majority& — but of the collective.
For more information on CCIM Institute's Cultural Diversity Education Program and other programs to help others start their career in commercial real estate, visit Our Programs page.