“Statistics for developers are difficult to come by, but the Urban Land Institute (ULI), a national real estate and land use industry association, says that five percent of its members identify as Black or African American” writes Amanda Abrams for the Washington Post. “The Washington Post spoke with more than 15 Black people working in real estate development about their experiences. The developers, many of whom have been in the industry for years and hold degrees from Ivy League universities, agreed that their opportunities have been limited by racism, institutional bias and a lack of connection to powerful networks.”
In the United States, the development industry plays an important role in how places grow. Developers are not only responsible for the appearance of buildings, but for their value. A lack of diversity amongst developers has engendered a lack of diversity in development projects, most of which are still targeted at the middle- to upper-income population.
Real estate development requires plenty of capital. This might include institutional dollars, private equity and investment from family and friends. The asset management industry is also overwhelmingly white, making it harder for Black developers to find the equity they might need for a project. And although bank loans for minorities are not as difficult to obtain as they once were, they can still present additional obstacles and might come with different terms and interest rates.
One sector in which Black developers have had more success is affordable housing. Although the returns are generally lower, many Black developers see a great need for affordable housing in their communities and want to give back. And although it’s complicated and time-consuming, affordable housing comes with government subsidies which minimize the need for private financing.
The Black Lives Matter protests have thankfully seeded a shift in the industry. Some financial institutions have new initiatives which encourage mentoring, training and capital for Black developers; government departments have initiatives to prioritize city redevelopments by minority-run development companies; and there are even training and mentoring programs for young Black adults to learn about development. This is the beginning of a multi-faceted approach to ensure racial equity in the real estate industry.
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Derivative image by Small Change from images by Wolfgang Eckert and africaniscool from Pixabay