How Are CRE Diversity Promises Holding Up?
By now it’s old news: When it comes to diversity, commercial real estate is lagging behind.
Less dated than the industry’s homogeneity, however, is CRE’s widespread commitment to diversity, equity and inclusion (DEI) programs, promises and personnel. White men have historically dominated all facets of real estate, and the industry has begun to self-assess with greater vigor.
Between 2020 and 2021, developers, firms and investors overwhelmingly made verbal commitments to diversity efforts. Although 2020 certainly didn’t spark DEI conversations — nor corresponding promises to elevate underrepresented employees — the murder of George Floyd gave voice and visibility to DEI inititaives and frustrations, said Yvonne Riley-Tepie, senior vice president of social impact at The Real Estate Board of New York (REBNY). She noted that 2020 led to a heightened awareness of America’s longstanding diversity problem, which has called upon real estate to critically evaluate its practices.
That sentiment is echoed by Joe Ritchie, head of diversity for Tishman Speyer. “There was a general acknowledgement, often for the first time, that there are deep structural and institutional impediments that women and people of color face and have to overcome to exist and thrive in corporate environments,” Ritchie said.
Indeed, the last two years have seen an evolution in the real estate industry’s mindset, intention and outlook. Yet while companies have rallied around a commitment to do better, the question remains: How have two years of DEI undertakings held up?
Answering that question is more complicated than merely examining the statistics or assessing 2020 actions and 2022 reactions. As every company began DEI efforts from various starting points, the industry saw a wide range of promises that included shrinking the pay gap; promoting minorities to leadership positions in C-suite and senior level roles; nurturing diverse talent via internship, recruiting and scholarship programs; and offering leadership trainings to create a more inclusive workplace culture.
Regardless of the paths companies’ diversity efforts have taken, 2020 and 2021 ultimately saw a predominant pattern: the widespread implementation of DEI departments and resources. REBNY launched a fellowship program intended to assist professional development and later created a diversity department of its own. Similarly, in April, 2021, Tishman Speyer hired Ritchie as the company’s first head of diversity — a position Ritchie cites as the most rewarding of his career to date.
As head of diversity, Ritchie has approached DEI efforts both within the company and externally, in terms of Tishman Speyer’s partnerships, projects and community impact. Some of these projects were underway prior to Ritchie’s arrival but remain ongoing priorities for the company.
External efforts, for example, include 2020’s launch of the Supplier Diversity & Economic Inclusion Program, as well as various development partnerships with minority workers and investors. Tishman Speyer also participates in REBNY’s Building Skills program, which, per Riley-Tepie, connects New Yorkers from historically underserved groups with local jobs and training. To date, the program has trained over 1500 individuals.
Such programs, which have upheld DEI promises, are crucial not only from an ethical perspective but also from the standpoint of viable business. “We need to change the narrative around diversity, equity and inclusion from it being a ‘moral obligation’ or being ‘the right thing to do’ to making it a business priority,” Ritchie said, “Because only then will it be truly durable. And I think we do that by embedding diversity into every aspect of our operations and finding ways for it to be accretive to our core business.”
Weaving diversity into business requires both overt steps and subtle cultural changes. For San Francisco-based developer Presidio Bay Ventures, both approaches have manifested diversity objectives into current business operations.
“As far as explicit goals are concerned, we feel like we live and breathe them every day between folks we bring on the team and things like our scholarship program,” said Kabir Seth, COO of Presidio Bay Ventures. “And those are really benchmarks to which we hold ourselves accountable.”
Seth’s understanding of diversity promises and goals is therefore twofold: He believes companies should evolve naturally and organically, but also take deliberate steps that may ebb and flow over time.
This approach ultimately resulted in Presidio Bay’s scholarship program, which launched in 2021 in conjunction with nonprofit Operation Genesis and provides underrepresented youths in California’s Bay Area with opportunities to learn about real estate. The program suggests that increasing diversity in CRE isn’t just about elevating voices at the top; sometimes it’s a matter of opening the door to begin with.
Historically marginalized youths may not be aware that certain career paths even exist, said Seth, and this program brings them into the fold by exposing them to options. After 10 weeks, the participants have completed their own creative, community-based real estate projects — and earned a greater awareness of opportunities that may have otherwise eluded them.
Yet the program requires time for results to come to fruition. “I’m not going to pretend like the day [the high school students] walk in the door that they’re so enamored by everything they’re doing,” said Seth. “It takes time. It takes care.”
The sentiment of timing rings true throughout each of real estate’s initial promises and companies’ still-in-flux results. When it comes to spearheading change, long-term, sustained effort is required, said Riley-Tepie. She referred to the push for diversity as a marathon — “never a sprint.”
Wendy Mann, CEO of CREW Network, an association of women in commercial real estate, echoed the importance of patience. Mann noted that it’s ultimately far too early to gauge if and how 2020 and 2021’s promises have led to progress. CREW conducts surveys every five years that assess the pulse on women’s roles in real estate. As the next CREW survey won’t be issued until 2025, the data remains up in the air.
Yet the past is undeniable. According to CREW’s benchmark studies, the last 30 years have seen little to no progress for women in real estate. In fact, 2020’s data showed that the compensation gap between women and men actually increased to 10.2 percent. Meanwhile, the commission and bonus gap amounted to a whopping 55.9 percent.
This regression — rather than progression — serves as a sobering reminder that despite all the talk about real estate’s diversity efforts, traction is still being built. Issues of diversity won’t be resolved overnight, no matter what toolbox or team a company has in place.
And given real estate’s past, progress is not only impeded by timing but by culture. As real estate begins to change for the better, mentalities must also shift. Such an evolution from the top down is easier said than done; outlooks surrounding women in power, for example, may remain old-fashioned — and so ingrained in a company’s leadership that change is a long-haul effort.
“It could take another generation for us to get there, frankly,” said Mann, pointing to the stagnation of women in CEO and C-suite roles.
While the data has yet to prove the promises, real estate’s impending generational shift isn’t necessarily a limitation so much as it is a beacon of hope. According to Seth, the real estate industry tends to go through cycles in which leadership changes every 20 to 30 years. Seth attributes 2020 and 2021’s rise in diversity promises to the emergence of millennial voices and values.
“I don’t think the attitudes have necessarily changed in the last two years,” said Seth. “I think it’s new leadership coming into these organizations and bringing the values.”
“Millennial” values could very well emphasize the success of diversity promises over the next few years. Mann remains optimistic that some change is in the works, citing the environmental, social and corporate governance (ESG) framework as a propelling driver of real estate’s social growth. ESG has supported and accelerated social changes that may have been slower to affect the industry.
As for where companies stand now — and how they’ve responded to their respective DEI goals — Mann believes firms should be self-accountable rather than oblige by any forced standard for reporting or policing of progress. CREW’s “CRE Pledge for Action” calls for signatories to commit to and evaluate DEI initiatives as they relate not only to women but also to other underrepresented groups. Once companies sign the pledge, they can choose to update CREW with their results — an option that has excited firms about sharing their progress.
Mann pointed to Avison Young as one example of a real estate firm that committed to the pledge and holds itself accountable for change. After signing in 2021, Avison Young hired a compensation manager to work toward pay equity. Per 2021’s ESG report, women now comprise 40 percent of the company’s executive team and 25 percent of the board of directors. Leadership, however, still remains resoundingly white.
Beyond the pledge, companies have been self-reporting progress through annual ESG reports. REIT Columbia Property Trust recently released 2021’s assessment. The company originally set the goal of maintaining at least 40 percent minority gender, racial and ethnic representation at the vice president level or higher. Columbia Property Trust first reached this percentage in 2019, and last year saw the promotion of six women and two employees from racial minority groups (one of whom was female) to significant leadership roles. In total, female representation at the senior level increased by 4 percent to 36 percent. Minority racial and ethnic representation at the same level now stands at 12 percent, double the previous year’s representation of 6 percent.
While companies are making strides, racial progress clearly is moving more slowly than gender equity. This lag is certainly not unique to Columbia Property Trust nor the sector of real estate. According to the 2022 Black Women Thriving Report from DEI firm Every Level Leadership, only 33 percent of Black women across industries believe their job performance is evaluated fairly, while only 34 percent feel comfortable asking for a promotion or salary increase.
The statistics prove that real estate — as well as corporate America at large — still has a ways to go. But progress and promises aren’t just about the numbers. In fact, Riley-Tepie cautioned against making DEI initiatives a numbers game because every company operates differently. Increasing diversity is about more than changing the data.
Ritchie echoed the need for a multipronged approach to tracking progress. While numbers surely demonstrate headway in diversity efforts, companies must think beyond the “D” in “DEI” to create associated equitable and inclusive workplaces — therefore addressing the “E” and the “I.”
That’s not to say that statistical goals should be distrusted. Rather, Riley-Tepie believes firms that have made specific, numeric promises have done their due diligence to assess what they can realistically accomplish. As companies may hesitate to speak out, Riley-Tepie wants to encourage continual reporting of progress in whatever form it may come. Vocalizing accomplishments could very well mobilize more diversity promises into action — so long as goals are more than just lip service.
“I say to people all the time, publish or perish,” said Riley-Tepie. “Getting the word out is twofold. A, it helps other people to be aware of the opportunities that are available in the real estate sector. But B, it’s encouraging for people who are in different areas of society to see these changes and recognize that there is change happening and that they too can become beneficiaries of this change.”
The data, the publications and the reports make it easy to conclude that, yes, there has been some progress toward fulfilling diversity promises. But unpacking change through company websites, pledges and the like can feel misleading unless it comes directly from the employees most affected by real estate’s lack of diversity.
“I keep thinking, as I grow in this job, how will I know that I’m successful?” said Riley-Tepie. “It is when I look around the room and I see someone who looks just like me sitting in the room.”
Anna Staropoli can be reached at email@example.com.