07/30/2020 | by

Heightened awareness of social justice issues following the May 25 death of George Floyd caused the business community to stop and reflect on its own shortcomings with respect to the representation of ethnic minorities, especially African Americans.

While efforts to increase racial diversity have been on the agenda for REITs and commercial real estate for many years, there is still much that needs to be done before the industry reflects the broader demographics of its tenants and customers.

Tammy Jones, chair of the Real Estate Executive Council (REEC)—a trade association working to promote the interests of minority executives in commercial real estate—and CEO and co-founder of Basis Investment Group, LLC, is trying to make that long-overdue representation a reality. She recently spoke to Nareit about her hopes for meaningful change within the industry during an extended video interview, which has been adapted for this article.

Q: Where do minorities fit within commercial real estate today, from entry-level positions up to the C-suite?

It’s common knowledge at this point that the commercial real estate industry has a huge diversity and inclusion problem, particularly with African Americans.

I’ve been in the business for 20 years. I have seen us poke at diversity with more of a focus on the early stage pipeline, and that’s important, but when you look at the senior jobs in real estate you get the sense that not only is there a succession problem in the senior ranks, there’s also a retention problem. The retention issue is super important. I always say that you can’t be it if you can’t see it. If you are an African American middle manager and you look at the C-suite and the board and you can’t really see a pathway for yourself, it’s really difficult for the industry to retain you.

Change starts at the top and it’s so important that we remember that. It has to really flow through the culture of the organization. We’re finally having open and honest dialog about this problem. The George Floyd incident really shined a light on all the various economic injustices, and health care and criminal justice disparities. In this moment, we really have an opportunity to create a movement around trying to create a more even playing field, particularly in commercial real estate.

Q: What factors have held back minority participation in the industry, particularly for African Americans?

Tammy Jones

Commercial real estate as an industry is almost the perfect breeding ground for exclusion. It’s a legacy industry that has a very closed network, which is hard for African Americans to break into. Many of us don’t have families in the business, so it’s important that we expose African Americans to the industry.

One of the things that REEC has done is create a high school program called Real Estate Exchange and by the end of this summer we will have exposed 400 African American and Latino kids from under-resourced backgrounds to commercial real estate. We didn’t let COVID-19 stop us, we just pivoted to an online platform.

Above all, the real estate business is about relationships. It’s not just access to capital, it’s not just hiring and having relationships to climb the corporate ladder, it’s also about access to credit. There’s a huge opportunity for a number of stakeholders, including some of the larger public REITs, for partnerships with African Americans.

I’m cautiously optimistic that in this moment there will be systemic change if we all work together, but we can’t do it alone, it needs to be a holistic solution. For the first time, I believe that everyone is acknowledging the problem. The statements and outpouring [following the death of George Floyd] were great, but it’s not enough. Now we need to talk about partnerships, and that’s the one thing the real estate industry knows how to do so well. This should be something we can do.

Q: Have you seen visible change during the course of your career?

I have seen various stages and phases of trying to poke at the diversity problem with marginal results, but I don’t feel there’s been a comprehensive approach to this. There are five strategies that could be utilized to help frame a solution:

  • Create a diversity business plan with concrete strategies;
  • Adopt a multifaceted diversity ecosystem that includes all stakeholders;
  • Leverage partnerships;
  • Look at your minority spend and who your vendors are; and
  • Focus on wealth creation and access to capital and credit for African Americans and other minorities.

Q: Do you see public disclosure of minority hiring as part of the solution?

Absolutely. Measurement matters and focus matters. If you look at the Fortune 500 companies right now, a third don’t even have a single Black person on the board. I’m hopeful that there’ll be an effort to look at ethnic diversity to make sure that there’s representation. We’re really excited about the opportunity to work with REITs, for example, but we have to make sure that there’s public disclosure.

Q: Where else do you see solutions coming from?

As far as the board is concerned, there are a number of stakeholders that could help, including proxy firms, large investors, and search firms that have had success in placing ethnic minorities on boards.

We talked before about the five strategies. If you don’t know where to start, start by looking at your leadership team, board, and current employees to see if there are African Americans and how they’re faring in their career.

Q: Are corporate boards doing enough and are there any good actors that have stepped up and answered the call?

We have to figure out how to make the representation of African Americans and other ethnic minorities on corporate boards transparent. We have to measure it. We have to create pathways. The folks who are voting these slates in need to really focus on whether they believe this is the best board if it has no African Americans or minorities on it. That just doesn’t make sense in 2020.

Ethnic diversity is a moral imperative, but for me as a CEO it’s also about producing better outcomes. We need to make sure the leadership teams and boards understand that not having an ethnic minority on the board is probably going in the wrong direction in terms of creating the best returns because you want to make sure you have everybody’s perspective.

I saw that more than half the independent directors in the REIT space in 2019 were women. That’s huge progress, but it wasn’t as positive for African Americans. You can look at the trajectory with gender diversity and you can now see that, in some cases, gender diversity was [the only type of ]diversity, so that was a little at the expense of ethnic minorities.

Q: On a personal level, do you feel this is a time when meaningful change could happen?

I’m cautiously optimistic, but I’ve seen efforts have a focus and then fizzle out over my career. It’s possible and I want to be hopeful. I believe that if we can take some of those public statements and really turn them into action and really work together in a way that is comprehensive, measured, and transparent, we will see results.

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