Since the Black Opportunity Fund was created last summer by a group of Black executives, several commercial real estate companies have reached out, says Dennis Mitchell, a co-founder of the fund. The initiative is aimed at providing Black Canadian-led businesses and organizations with long-term stable capital.
When the commercial real estate companies inquired about bringing in interns from the Black community, almost all stated they typically recruit from the best schools for their existing internships, says Mr. Mitchell, chief executive officer of Toronto-based Starlight Capital Inc., which manages real assets.
“It creates this perpetuation of feeder systems from certain prestigious schools that tend not to be overly racially diverse,” he notes.
Dennis Mitchell, chief executive officer and chief investment officer of Toronto-based Starlight Capital, and co-founder of the Black Opportunity Fund.Supplied
This kind of pattern has led to a lack of diversity in the commercial real estate (CRE) industry, Mr. Mitchell says, something many insiders have identified as a problem.
In 2016 “it became clear to us that we had a problem,” says Michael Brooks, chief executive officer of Realpac, a national real property association with about 125 members, including large public and private real estate companies and pension funds.
According to Statistics Canada, based on the 2016 Census, people of colour made up almost a quarter (22 per cent) of Canada’s labour force and could be more than a third of the labour force (36 per cent) by 2036.
But data on the composition of the CRE industry is not as easily available. A few surveys in Canada have been trying to get a clearer picture.
Chandran Fernando is founder and managing partner at Toronto-based Matrix360 Inc., a diverse-owned talent management and workplace strategy firm focused on the commercial real estate and development industry.
In 2018 he founded the Commercial Real Estate Equity and Diversity Council (CREED Council) as a non-profit organization of commercial real estate and development professionals aiming for equity and diversity in leadership.
“People are the bridge between profit and possibility,” he says.
Realizing that action is difficult without benchmarks, Matrix360 conducted the Canadian Real Estate and Workplace Diversity Survey in 2016, which found that among respondents, 52 per cent are women, but only 34 per cent are in partner, owner and C-Level leadership positions.
The majority of respondents were Caucasian and/or of European descent at 71 per cent. The next largest ethnicity was of East Asian or Pacific Islander descent at 9 per cent and South Asian at 7 per cent. As for owners, partners and C-level positions, 14 per cent were visible minorities. Aboriginal Peoples and people with disabilities were represented in the industry at 1 per cent each, and those who identified as LGBTQ at 5 per cent.
Another organization, the Kansas-based Commercial Real Estate Women Network (CREW), has been tracking gender diversity in North America and Britain through a benchmark study every five years.
Its most recent survey, conducted in 2020 – with about 10 per cent of responses from Canada – noted that the fixed salary gap between genders was 10.2 per cent and the commission and bonus gap was 55.9 per cent.
Why pursue diversity?
“There is a multitude of data that show that companies that are more diverse can translate that to greater profits,” says Simone Loumankis, director of property management at Avison Young.
Ashley Willard Bauman, president of CREW Vancouver.Supplied
According to the Canadian Centre for Diversity and Inclusion, research suggests that gender and racial diversity can help companies in a variety of sectors to increase sales, attract more customers, get more market share and earn larger relative profits.
As well, diverse teams understand clients’ needs better than homogeneous organizations, and diversity and inclusion policies can attract, retain and engage employees, the centre notes.
Another reason to pursue diversity is that many clients, investors and shareholders are increasingly demanding it, Ms. Loumankis adds. “People won’t give you their business. They won’t want to invest with you.”
Cindy MacMillan, CREW Vancouver’s immediate past president, notes: “Some bigger corporations and boards, and some of the capital behind [CRE projects] are putting pressure on organizations.”
The bottom line for Ashley Willard Bauman, president of CREW Vancouver, is, “We are building in all asset classes for diverse communities. If the people making those decisions and growing our communities are not representative, there’s just a complete disconnect.”
What companies can do
Mr. Fernando says companies need to look at their hiring process and address: “What is their network, and do they have the exposure to a diverse talent pool? What is their recruitment policy? Whom do they have as hiring managers?”
The effort does not stop at the hiring stage. The culture at the business may also affect who advances, or even stays, at the company. Mr. Fernando gives an example: “The ceremony to cut men’s ties on completing big deals screams ‘old boys’ club’ culture.”
Consider diversifying the supplier base, Mr. Mitchell suggests. “There are a number of Black-led firms that have struggled to penetrate various industries or to achieve critical scale.”
Realpac has a number of initiatives, including adopting a pledge to avoid speaking on a panel if it does not include at least one woman, and preferably someone from an underrepresented group.
To boost diversity in the upper ranks of the industry, insiders say coaching and mentoring at all levels is also key.
Marcel Parsons, senior director, asset strategy and valuations at First Capital REIT.Supplied
According to Marcel Parsons, senior director of asset strategy and valuations at First Capital REIT, “You tend to gravitate to people who are more like yourself [to] coach, mentor and sponsor. There needs to be a better effort at reaching out to other groups and communities.”
Quotas are an easy fix for today, Mr. Parsons says, “but we are doing this for people who are starting out, that it doesn’t take them 15 years to get to a certain level.”
COVID-19 and caregivers
The COVID-19 pandemic has had a disproportionate effect on people of colour and women across most industries, including CRE. As women are often the primary caregivers in families, whether for children or elders, some have struggled to balance work and home responsibilities.
“This sits heavily on the minds of almost every parent that I know,” says Minakshi Pai, director of marketing and communications at Realpac. “It’s not just mothers but it definitely impacts them far more.” Ms. Pai says she knows of several women who have taken unpaid leave or quit because their company has not been flexible and understanding.
This issue goes beyond the pandemic, however. The CREW 2020 benchmark study noted that “Women are more likely than men to report that their compensation and/or career advancement has been adversely affected by their marital status or the need to care for family. These percentages have remained virtually unchanged since 2015.”
Companies would be wise to take a serious look at flexible work arrangements, even after the pandemic is brought under control, says Carolyn Lane, Realpac’s vice-president of member engagement, and chief operating officer. “Employees are going to demand it with their feet.”
The Vancouver board of Kansas-based Commercial Real Estate Women Network (CREW), which has been tracking gender diversity in North America and Britain through a benchmark study every five years.Sam Steele/Supplied