Presented By: Kasowitz Benson Torres LLP
Don Peebles Leads the Way on Making DEI Reality in the CRE Development Space
For Commercial Observer’s National Diversity & Inclusion Forum, which took place Nov. 3, it’s appropriate that one of the key discussions — between Jennifer Recine, partner at Kasowitz Benson Torres LLP, and Don Peebles, founder, chairman & CEO of The Peebles Corporation — took place at Miami Beach’s historic Bath Club, which Peebles redeveloped.
The site held significance for Peebles beyond just the achievement in development.
“The Bath Club is an example of progress, but also a reminder of how far we’ve come,” said Peebles. “The Bath Club was founded in 1926. Herbert Hoover, the U.S. president, was a member. It was the epicenter of social Miami, but it was a restricted club.”
Pebbles recalls joining the club in 1996, then receiving a surprising phone call from the society columnist for the Miami Herald.
“She said, ‘So how does it feel to be the first Black member of the Bath Club?’ ” Peebles recalled. “I said, ‘What do you mean?’ It was so weird. And she said, ‘Didn’t you know it was a restricted club? No Blacks and no Jews.’ ”
Even after changing the rules, the club, according to Peebles, ultimately struggled to recruit new members because of its discriminatory past. This gave Peebles the opportunity to buy it, have the clubhouse designated a historic landmark, and build an adjacent condo tower and six oceanfront villas.
The landmark designation was driven by the desire to ensure that the club’s history was not forgotten.
“I thought it was important that we always have conversations like this,” said Peebles. “Being in this historic building, people will ask about the history, and they can be reminded of how this club started based on antisemitism and racism. And that hopefully makes it much more unlikely it’ll ever happen again.”
Peebles believes that his achievements regarding the Bath Club speak strongly to the promise of the American Dream.
“It’s a 200-member private beach club now,” he said. “We have an extensive waiting list, and we have events here. We’re very proud to be here and very proud of what it stands for. Me being the first Black member to join the club, then buying the club and having it exist in a whole different way, plus being able to develop a successful condo development here, that’s an example of the beauty of America.”
Peebles discussed his belief that the work of dismantling racism and discrimination is the responsibility of everyone in commercial real estate who has the power to influence projects, companies and events.
“America’s a great country that provides great opportunity, but people of color, Jewish Americans and women have confronted discrimination in different forms for a very long time,” said Peebles. “Our society has evolved, but the work isn’t done yet. All of us have a responsibility to stop it, to create different environments and to make our point that inclusivity is the pathway to excellence and a better society. That’s what we try to do with the company — to be inclusive, and to provide economic opportunities for a broad spectrum of people.”
To that end, Peebles makes a point of only developing in environments that are conducive to diversity.
His newest project, the 90-story, 2 million-square-foot Affirmation Tower on Manhattan’s West Side, is a triumph of both diversity and creativity.
“What’s important about this project is that it’s meeting several moments that New York City needs coming out of a global pandemic,” said Peebles. “There is considerable stress on New York’s economy and resiliency, and the country needs a shot in the arm. If you look at the Great Depression, then it was the Empire State Building and Rockefeller Center in New York that set the tone that New York is coming back and the country is resilient. When terrorists attacked our nation on Sept. 11, the Freedom Tower made the statement that America is resilient, and will fight to protect freedom. Now, coming out of a global pandemic, we need something similar. Affirmation Tower addresses that moment.”
The Tower, Peebles said, is committed to doing over 35 percent of its contracts with women- and minority-owned businesses.
“It sends a message that New York and America are coming back, and that we’re doing it differently,” Peebles said. “We’re doing it with more inclusivity than back in the days of the Empire State Building, when minorities, women and diverse religions were left out of the economic mainstream of our country. We’ve made a lot of progress, and Affirmation Tower can send the message that there’s economic opportunity for everyone.”
Recine asked Peebles, who notes that not one major New York City skyscraper has been built by a woman or African-American, what everyday New Yorkers can do to support this type of opportunity.
“The first thing we all should do is to expect and demand fair access to opportunity,” said Peebles. “The development business is a capital-intensive business, and so in order to grow your business, you need access to capital. Much of that equity capital comes from private equity, which manages capital for large public employee pension systems and the like. Right now, there’s about $80 trillion-plus of capital invested in private equity and venture capital, and less than 1.3 percent of it combined is invested in firms run or owned by women or people of color. We all have to demand better. Capital ought to invest in women and people of color and their businesses, just like they do with everyone else. Until we get to that, we need to push harder.”
Recine concluded their discussion by asking Peebles what New York’s government could do to be more supportive of projects like Affirmation Tower.
In addition to opening their eyes to women and minority developers in general, Peebles said it’s important that certain “artificial impediments” to obtaining financing be eliminated so new developers can compete.
“For example, there are less than five private equity funds led by women or people of color. But most public employee pension systems will not invest in first-time funds. That’s unfair, because if you’re not willing to invest in first-time funds and there are no diverse funds in the space, then how do you invest in one? It perpetuates the status quo. Great fortunes are made when someone will take a chance on you, and that’s what we want to do for the next generation of people of color, women, and other people who have been historically discriminated against.”