Commercial Real Estate’s State Of Diversity

Milbank Diversity Committee

Certainly nothing against white males — I happen to be one myself — but I do often wonder: why do the commercial real estate industry’s executive employment patterns so persistently stick to a script that more resembles the 19th century than the 21st?

This is a question on the minds of many in this $300 billion industry made up of so many moving parts. CRE encompasses a uniquely wide range of professional subspecialties — the arena runs from leasing to law, from analysis to development and across all the many points in between. So with all that territory and disparate training, how do gender and ethnicity barriers to advancement persist?

Dedicated to this question is Commercial Real Estate Diversity Report (crediversity.com).  These researchers are addressing the issue with original studies based upon US Census and EEOC data. CREDiversity has been taking advantage of the fact that since 1964, large private employers of greater than 100 employees have been required to report annually to the Equal Employment Opportunity Commission the composition of workforce by job, gender and racial categories. Without this data, the understanding of workplace composition would be purely anecdotal.

Their most recent report (full PDF available for download here) is loaded with indicators that while progress against racial and gender barriers to advancement is proceeding in this industry, the pace is slow.

Census data on the US population aged 25 to 64 and holding 4-year college degrees shows 39.5% are White women, 36.7% are White men, and 23.8% are Black, Asian or Hispanic. If there were no barriers to entry or advancement, the commercial real estate industry’s workforce would be expected to mirror the nationwide supply of college educated workers. It does not.

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We analyzed EEOC data on 166,554 employees in five job categories: Executive/Senior Level Officials & Managers (“Senior Executives”); First/Mid Level Officials & Managers (“Mid Level Managers”); Professionals; Technicians; and Clerical Workers, and found that the commercial real estate workforce is considerably less diverse than the U.S. adult college-educated population, and that White males dominate every job category except for Clerical Workers.

The CRE Mid Level Manager data set represents 47,844 jobs. White men hold 68.9% of those jobs. White women hold 16.8%, and collectively, minorities hold 14.3% of jobs. Again, the largest representation by a minority group is Hispanic males, with 4.7% of jobs – one-third of all the Mid Level Manager jobs held by minorities. Black males hold 2% of jobs; Hispanic women 1.9%; Asian men 1.8%; Black women, 1.7%; and Asian women, 1.1% of jobs.

The CRE Professionals category represents 61,073 jobs, and is the largest job pool. While White men are again the majority of job holders at 58.5% of Professional jobs, that percentage is the lowest percentage showing by White men among the four non-clerical job categories. 

Developing Solutions: USC’s Stan Ross

Chairman of the board of University of Southern California’s Lusk Center for Real Estate Stan Ross established the Ross Minority Program in Real Estate twenty years ago, taking a San Diego neighborhood development approach:

GlobeSt.com: Diversity in the workplace seems to have taken the forefront of news coverage recently, but the USC Ross Minority Program in Real Estate has been working towards this goal for almost 20 years. Why is diversity so essential in the real estate industry?

Stan Ross: The creation of the program itself was essentially a response to the desperate need for qualified, experienced real estate professionals who could relate to the inner-city needs after the Los Angeles riots in 1992. The Los Angeles Community Redevelopment Agency sought to involve minority developers to revitalize the broken city, but they found it was lacking such professionals. The riots may have taken place more than 20 years ago but this problem still exists.The real estate industry has had very limited diversity while the minority groups have steadily increased in percentage of the population. The Ross Minority Program in Real Estate has found that this means cities are still in need of professionals who are familiar with the cultures in those areas who can provide first-hand knowledge in terms of preferences of designs, colors and even numbers. It’s about people of the community, people who understand the community and people who came from the community having a real understanding of the needs and it’s all based off of the real estate component. The program focuses on fulfilling this deficit. It’s not just about workplace diversity; it’s dealing with the whole development process.

Read the entire Globe St. interview with Mr. Ross here.

The NFL’s Rooney Rule: Good For Boardrooms?

CREDiversity’s Publisher Elaine Anderson doesn’t stop at researching the problem.  She suggests a solution drawn from an unlikely source: professional football. The “Rooney Rule” adopted by the NFL in 2003 (named for Pittsburgh Steelers owner Dan Rooney) once adopted by all NFL teams has made some inroads into creating more interviews for professional football coach positions.

A recent ForbesWoman Files article by Kim Van Der  Zon made the case for a Rooney Rule for corporate boards, citing Catalyst research that in 2011, only 16.1% of board seats at  Fortune 500 companies were held by women, and about 10%  of companies had no women directors.  

But why not adopt a Rooney Rule for all hiring, from  entry level to CEO to the boardroom? If every commercial  real estate company makes the effort to identify and interview  diverse candidates for every job, we will have a much better  chance of finding the pipeline of talent that the industry needs  to succeed in a changing world.

And if companies are having a  hard time finding diverse candidates, one place to look is www. projectReap.org. REAP, the Real Estate Associates Program, is  the commercial real estate industry’s leading diversity program  bringing the country’s most talented minority professionals into  the world of commercial real estate, and has now graduated several hundred well-qualified minority professionals, whose contact information is online.

To which I would add: The CREW Network (Commercial Real Estate Women) has long been a source of highly qualified and experienced executives and should be a part of any firm’s search for talent.

And talent has to be the point, not tradition. While it’s true that corporate cultures and the handing down of private firms through family dynasties explains much of the status quo on diversity in finance and business more generally, it doesn’t excuse it. The US has always found great strength in its ability to attract and promote talent for talent’s sake. Success is about who we are and how well we do what we do.  It should not be about how we were born.

05. September 2013 by Wayne Grohl
Categories: Careers | Tags: , , , , , , | 4 comments

Comments (4)

  1. What an important and timely topic – thank you for devoting space to it, and for capturing some of the recent research and efforts to effect change. As a CREW leader, I too have had reason to call attention to the issue. Here’s a link to an article I wrote last year highlighting some possible actions that can be taken.

    http://bit.ly/MRekVN

    • Great writeup, Barbi – I also recall that CRE Radio Show with Faith Hope Consolo and the CREW leadership. Great stuff.

      Progress is too slow, but because growth has to come from somewhere – and in the US, the demographics of college education make it clear that gender and race-diversity is on track to becoming the norm – I see this industry as getting out from under this problem by a) passively growing itself away from it b) fostering continued challenges to cultures of entitlement and unwarranted expectations. Armed with EEOC data and real talk, we can do this.

      WG

  2. Pingback: Real Estate Portal | Evershine Web

  3. All I’ve experienced is resistance to change. The research listed reinforces my position. I am a female with a high IQ and an excellent education. Of all my chosen career paths real estate is the most white male dominated. What a waste of innovative ideas and time-tested process techniques. As time passes, my tolerance level for stupidity weakens. I move on. If it can’t be “win-win”, it’s “you lose-I leave”.

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