By Charles Davidson Contributing Editor
It's no stretch to say 2001 was a momentous year for the minority executive. Three African Americans were tapped for high-profile CEO posts — at AOL Time Warner, Merrill Lynch and American Express. Even the country's most storied college football program, Notre Dame, hired a black head coach.
On the commercial real estate playing field, the industry includes a few high-profile minority execs, but they remain a rarity. And most are running firms that they built. Quintin Primo III is co-chairman of Capri Capital, a Chicago-based real estate investment organization founded by African Americans that manages more than $6 billion in assets; Paul Chiles (opposite page) oversees a successful commercial brokerage, Chiles & Co., in Seattle; and Pamela Bundy, an African American woman, is president of Bundy Development Corp. in Washington, D.C.
But much more progress is still needed, according to Michael Bush, executive director of the Real Estate Apprentice Program (Project REAP) based in Washington, D.C. The program recruits and trains minorities for professional careers in commercial real estate.
Before launching REAP in 1997, Bush spent 20 years as a real estate executive for Giant Food. He has vivid memories of his attendance at conferences hosted by the International Council of Shopping Centers.
“There would be 1,500 white guys in the room and two black guys,” he says, “and it would be the same two black guys for 10 years.” Minorities comprise a tiny fraction of all commercial real estate professionals, says Bush, who's white. “The numbers are so small that no one bothers to keep them.”
And among 80,000 licensed real estate appraisers in the U.S., less than 2,000 are minorities, according to Don Kelly, vice president for public affairs at the Chicago-based Appraisal Institute. “It would appear,” Kelly says, “that we've got some work to do to get broader diversity in the business.”
Even in cities with high concentrations of African Americans such as Detroit and Philadelphia, minorities typically comprise under 5% of the staffs of major real estate companies, explains Chiles, who worked at CB Commercial (now CB Richard Ellis) for 15 years before starting his own shop.
Awareness and education initiatives
It's not that the industry avoids reaching out to minorities. Diversity initiatives are common among industry associations and some of the industry's top companies such as Indianapolis-based Duke Realty Corp.
Motivated by the changing makeup of the workforce, Duke in 2000 launched an internal campaign to promote diversity, and for the past four years has hired summer interns through a non-profit program called Inroads, which is designed to attract minority students to the real estate industry.
At the Appraisal Institute, a minority outreach committee has been in place for a decade, says Kelly. In the mid-1990s, the Institute began a program to award scholarships to minorities for appraisal-related studies and general college and university study. About three dozen students have received scholarships, including 13 students during the 2000-2001 school year.
Meanwhile, Project REAP offers a semester course for minorities, available at both Howard University and Clark Atlanta University. The typical minority student is 25 to 30 years old with a bachelor's degree and a keen interest in the real estate industry.
The courses are sponsored by companies such as Atlanta-based The Home Depot Inc. and Indianapolis-based Simon Property Group, which agree to hire a graduate for a year-long internship and pay a market salary. REAP's Atlanta program was launched at Clark Atlanta University last fall at the urging of Charles Ackerman of Ackerman & Co., a prominent local developer.
Given these diversity initiatives and the fact that blacks, Hispanics and other minority groups make up at least 25% of the U.S. population, why don't minorities enjoy a much greater presence in the commercial real estate world?
“I think many organizations simply need to try harder,” says Primo of Capri Capital. “I often hear the argument that ‘we just simply cannot find qualified minorities for the positions we seek.’ That's an old argument that doesn't hold a whole lot of merit today, particularly with the crop of minority candidates coming out of the top business schools across the country,” adds Primo, a graduate of Harvard University. Additionally, the real estate finance executive believes there have been far too few diversity initiatives undertaken in the industry to have had a significant impact.
Another reason for the slow progress, Primo says, is that the commercial real estate industry typically lags behind the rest of Corporate America when it comes to change. Diversity, he says, is no different. The industry has lacked the decades of public market discipline and scrutiny that other industries have faced.
Outright racism is rarely a problem, says Chiles, one of 1,100 designated Counselors of Real Estate, a national membership organization established exclusively for leading real property advisors. But when real estate companies claim they can't find qualified minority employees in cities with large African American populations such as Detroit, Philadelphia and Atlanta, Chiles says, “you're not being truthful with yourself or other people.”
Yet, not everyone is as critical of the industry. Some minorities active in the business say that skin color and ethnicity are becoming less important in getting deals done and climbing real estate's ladder.
“It's really about individuals making opportunities for themselves,” says Deborah Quok, a woman of Chinese descent and senior managing director in the Global Research & Consulting Group at CB Richard Ellis in San Francisco. “I don't care if you're blue with purple polka dots, it really is about the individual's efforts, developing skill sets, developing experience and leveraging those skills.”
The impact of demographics
If demographics are destiny, the real estate industry will need to do a better job of creating a diverse workforce.
The real estate industry, like all others, will face a different America over the coming years. The population, and thus the work force and customer base, is becoming less white. The percentage of white Americans is steadily shrinking, down from 74% of the U.S. population in 1995, to 71% in 2001, and it will fall to 60% by 2030, according to the Census Bureau.
What's more, the white population is getting older and leaving the work force in larger numbers than minorities. Meanwhile, the U.S. Hispanic population is especially fast growing: 27.1 million in 1995, 33.6 million in 2001 and a projected 68.2 million by 2030, according to the Census Bureau. Hispanic Americans accounted for 10% of the total U.S. population in 1995, and the Census Bureau projects that figure will increase to 19% by 2030. Meanwhile, the proportion of Americans classified as Asian or Pacific Islander figures to more than double, to 7% by 2030, up from 3% in 1995.
“You better make sure that you're paying attention,” advises Denise Dank, vice president of human resources at Duke Realty, referring to the changing demographics.
At the end of 2000, Duke unveiled a six-point plan to increase the diversity of the company's work force and help employees embrace ethnic diversity. The six points of Duke's initiative: recruiting and retention; training; forming a diversity council; awareness and events; community affiliation; and public image.
The power of relationships
Diversity programs run into obstacles, however, when long-standing relationships keep new players out of the game. In corporate real estate transactions, where huge amounts of money are at stake, the parties involved want to feel comfortable, Chiles and others note. And they tend to be comfortable dealing with people they know, and who come from similar backgrounds.
Often, those sorts of relationships go back decades. As Bundy of Bundy Development Corp. says, “My grandfather didn't go to school with their grandfather.”
Working as a young real estate lawyer in Boston several years ago, Michele Battle was startled to learn how few minorities were part of the deals involving large corporations. “There were some women, but in terms of racial minorities, there really were none. That was disturbing to me,” says Battle, now the managing attorney for The Battle Law Group LLC in Atlanta. Battle has 12 years of experience in real estate law.
Though the general consensus among the persons interviewed for this story is that there are more minorities in important positions than ever before, the pace of change is slow. That's because it often takes a leap of faith for a manager, whose job can be on the line when selecting a property manager or broker, to sign up a minority he or she doesn't know over someone else, according to Chiles. It often takes that leap to open the door for a minority player, Chiles explains. And top executives must allow mid-level managers to make those leaps, adds Battle.
“People tend to go with those they feel more comfortable with, and that is often the people who look like them,” Battle explains. “So one of the issues is: Why are middle managers mostly white males?” Battle says that if there was greater diversity in the ranks of middle management, the chances of minorities handling the big real estate transactions would increase.
On the other hand, it's not easy to find qualified minorities eager to jump into the property business. Among African Americans, for instance, real estate is traditionally not viewed as a career of choice, Chiles says. That hurts the industry in recruiting talented African Americans because the traits that make a superior property broker, for instance, also make for a good attorney.
“We're not often a first choice among the kinds of people who could do well at this business,” Chiles explains. “When you're growing up as a young African American, the things you aspire to be are a doctor, lawyer, teacher or clergyman. Those are the occupations that seem to be revered in the African- American community.”
The business argument for change
Many prominent minorities interviewed for this story believe they can encourage younger minorities to consider a real estate career by driving home the point that there are successful African Americans, Asian Americans, Hispanic Americans and others in this industry.
And faced with changing demographics, real estate companies are coming to the conclusion that to attract bright people to the profession in the future, they must embrace diversity. That's the issue that's driving Duke Realty's diversity campaign, says Dank.
The key to making sure corporate campaigns work, Dank says, is to make a business argument, which hinges on one critical point: Companies in the coming years will be forced to hire more minorities and women because they account for the majority of people now entering the U.S. workforce. So employers better start figuring out how to embrace these groups and make them feel good about their workplace so that they produce, Dank says.
“You do have to make a proactive effort,” Dank urges. “You can't just wait for people to come to you because this has not traditionally been an industry that has a lot of minorities and women in it.”
Secondly, Dank says, it simply makes good business sense for companies to assemble a work force that reflects the communities those companies seek to serve. “How else,” she adds, “would you expect to get your share of the business from minority customers and shareholders?”
David Dale-Johnson, director of the real estate program at the University of Southern California's Marshall School of Business, makes a similar argument. Dale-Johnson says that real estate firms striving to do business in areas with large minority populations would be well served to have minorities in their ranks.
“There are business opportunities in markets in which diversity is critical,” says Dale-Johnson, who helped start a two-week summer program for minorities at the Lusk Center for Real Estate at the University of Southern California. “I don't think it's that easy for a majority developer to go into some of these markets and understand the consumer, the geography, the dynamics and the politics.”
According to Primo of Capri Capital, as huge chains such as Wal-Mart and Home Depot increasingly turn to urban markets for new store sites, these retailers will need professionals who aren't strangers to inner cities. “Who better to access and analyze the urban market opportunity than minorities? It's a compelling story.”
Ultimately, Chiles believes, social and political forces will be the catalysts for change. “Frankly, I think things will change only when the customers of real estate professionals say that if your team doesn't look like the community in which we live, or come closer to looking like our community, then we will be doing business with other organizations that do,” Chiles says. “If that happens, I promise you there will be a change.”
The global economy is a positive force in the quest for greater diversity. Having worked in international business at Lucent Technologies, the big telecommunications equipment maker, and now at CB Richard Ellis, Quok says that working with people from different countries, who speak different languages, and have varying accents and skin tones, is business as usual.
A long-term proposition
In gauging how deeply a commitment to diversity has taken hold, Dank of Duke Realty says that simply adding a batch of nice-sounding programs does no good. It's more important, she says, to examine a company's routine policies and practices. “Are they inclusive? Do you have a promotion policy? Is it working for everyone — women, minorities, people over 40? I think that's what Duke will do, and I think that's what a lot of companies have done and others should do.”
Dank says that minority initiatives are similar to voting. If large numbers of people do their part, situations can improve. Ultimately, any company regardless of the industry will address issues of diversity when the decision-makers are convinced it's good for business.
Primo believes the issue for Corporate America boils down to one unavoidable conclusion. “Those companies that finally do ‘get it’ will outperform those that don't.”
Charles Davidson is an Atlanta-based writer