Diversity problem in CRE

My understanding from being new to the business here is because it still has the stereotype of being a boys club. I see the big banks and large financial institutions have greatly expanded their hiring pool of diverse candidates. My take on it is because they have enough working capital to hire a bunch of grads each year why in CRE, most of the time it's harder to hire that many when the occasion does come, it can be out of obligation to hire the client's kid. I do think however, the big CRE firms are really trying to hire diverse candidates more now then say five years ago. I'm a female and me being one of the few, has actually helped me because I was able to stand out and people remember that easier. Of course, take all of this with a grain of salt because I'm still learning the business - this is just the pieces I've heard through the forum and talking to brokers. 

stfu

Real estate is a small and often incestuous business, which means more overt use of the good old boys network.  It's also extremely capital intensive, which means groups that are already less likely to be wealthy are going to be even more underrepresented. 

It can be fixed by people within the industry making a concerted effort to hire more women or people of color, and not just hire your friend's kid.  Doesn't change anything overnight, but eventually you see those groups more adequately represented at upper management levels, which means at the very least that now the old boys club includes minorities.

It's also a question of institutional will.  Brokerages aside, most real estate shops don't hire people without some experience and they don't hire very many people at all in general.  When you're only hiring one or two junior folks a year it's easy to excuse the homogeneity of the people you're hiring.  When you hire 1,000 analysts at a go at a bank, it's easier for a lot of reasons to make and keep a commitment to hiring diverse candidates.

I would bet the diversity problem is not as bad at the top of the industry.  I just googled for bx re analysts and the first couple names that popped up were very 'foreign' sounding.  

It's gonna be worse at a firm in Columbia SC.  Problem is it's just not that hard a job.  There's not a big incentive to hire some brilliant korean kid from Carnegie Mellon.  Nor, most likely, is that brilliant kid trying to get a job in real estate in Columbia SC.  

The theory should be, if there's really a benefit to hiring URMs in real estate, someone could start a shop staffed by smart aggressive minority kids and just wipe the floor with the mindless preppy white guys they compete with.  It's not a bad theory honestly, and I'd be willing to try it if I actually needed to hire someone right now.

Anyone in RE want to take me under their wing/mentor me? Am a current 1st year analyst at a BB with a background in RE. I studied RE and ended up working in IB but regret not going into RE and want to make the change ASAP. I can model waterfall cash flows, research, pitch, and use powerpoint and Excel like a madman. My entire college experience consisted of participating in MetLife/Cornell/TIAA/etc Real Estate competitions. Am hungry for an RE job and am plowing through ARGUS to get more credentials on my resume.

If you looked back 10 years ago, STEM fields had the same lack of diversity (not that it is completely cured now, but better). They created outreach programs at the elementary/junior highs level to try and reach kids early. It is much harder to do that with RE because it is capital/time intensive. Very few schools would have the resources to allow students to underwrite, purchase and AM a live deal (hell, only a few very well endowed universities can even offer something along those lines, and even then it is usually as an LP and for graduate kids only). So RE is generally regulated to a one or two lesson thing in a personal finance course, if kids even get that. For most people, RE is a really abstract thing until they go searching for their first home. And even then, it is still a bit abstract because most people don’t understand 1/4 of the paperwork they sign /process to close. If you could figure out a way to reach people younger, that would be a great start.
 

From there, let’s talk about universities and colleges. I know that people in RE like to say that we aren’t as elitist as other finance related fields, we don’t have target schools, and anyone can make it. And while I think that is sorta true (there are a lot of people in RE that have unusual paths to the industry), isn’t exactly as easy as just submitting your resume to any shop and getting a shot (a lot of those people with interesting backgrounds got a lead through networking). Large institutions tend to favor Ivy League/top business school educations in general, so those preferences tend to be pushed to their RE groups as well. When those schools are your main pipeline for new talent, what you see in the demographics of their classes is what is going to be reflected in hiring. Ivy League classes are about 50% White  25% Asian, 10% Black, 10% Latino and the rest being Native American or multi racial or non-identified, which aligns heavily with the dominance of White/Asians in the industry. Change admission demographics to the top schools and that at least will help with the issue of the pool of candidates.
 

Stopping smaller firms from using nepotism/hiring people like them is much harder to solve. People like to work with people like them (this is why fit is such a big thing) and are generally lazy. Small 20 person firms hire their friend’s kids because they don’t have large HR departments and can’t generally be bothered with doing an in-depth search. Bob’s kid coming out of school, that you’ve known his whole life and can start on Monday is much easier to hire than doing the work to find a [enter minority group here] candidate.

I'm a first-gen HS and college graduate from a low income, immigrant family. I currently work at a $3B+ AUM REPE firm and want to share some of my experience. I found my passion in real estate early in undergrad. I quickly realized the odds were stacked against me because I had no connections to the industry, so I did my best to replicate the path my affluent and white peers take to get internships and jobs (networking, talking about certain things).

Looking back, I might not have always been the most qualified candidate for a position (GPA was on the lower end), but I believe whoever hired me saw a lot of potential so they took a chance. I hope my responses to your questions help provide some insight from my experiences thus far.

1. Why does CRE lack diversity?
   1. Overall, it’s absolutely rooted in systemic racism but I won’t get into that now. In terms of representation today, it’s very much due to the good ol’ boys (and girls) club system. I was astounded by how many of my peers in the industry went to the same private schools, frats and sororities, and/or were from the same families. 
   2. No surprise here but RE firms have always behind the curve in almost every aspect. Diversity initiatives are just now taking off because institutional investors are more conscious of this issue in recent years. I believe it is becoming an important criteria in determining capital allocations to funds. As institutional capital continues to flow into real estate, real estate firms are starting to turn more attention to improving their diversity to gain more capital.
   3. I graduated less than 5 years ago and there was minimal dialogue about increasing diversity in RE until last year. My school has a RE center and only recently launched diversity initiatives. In addition to increased demand from employers and institutions, I believe there is a more concerted effort to respond to recent social movements and harmful practices in RE (red lining, gentrification, lack of affordable housing).
2. Even when candidates are qualified why are they overlooked? 
   1. I believe “cultural fit” is a huge one. If you can’t pass the “airport test” because you don’t have the same interests as a traditional RE guy, then you'll probably get overlooked. I was able to overcome some of this because I could talk about college sports and golf (even though I've never played), but I've been to my fair share of awkward happy hours and lunches.
   2. Someone from an underrepresented group can appear less polished than someone who knows the system well. The privileged peer might have access to the resources and mentors that the underrepresented candidate doesn't.  
   3. I know I have been passed up on opportunities because of my GPA (that’s fair). Unfortunately, I never got the chance to explain that away and why it's truly not an indicator of my future potential and my passion for RE.
   4. Nepotism.
3. Do minorities really have a chance to make it to executive positions in CRE? 
   1. I’m not in that position yet but I’ve seen more underrepresented minorities in senior positions at Agency lenders, LifeCos, and minority-owned family offices. Again, these are mostly at institutions who are more proactive about addressing diversity and inclusion issues.
   2. I hope so but I know that promotions a lot of firms can be political. My firm has standardized performance reviews and feedback, which should eliminate bias in the future.
4. What can be down to solve this issue? 
   1. Intentional hiring and mentoring of people from underrepresented groups if they exhibit potential. 
   2. Eliminate bias from as many processes possible (interviews, performance reviews, etc.).
   3. Eliminate harmful practices in RE, which discourage underrepresented groups from even wanting to enter the industry in the first place.
   4. Increased investment in DEI initiatives that focus on increasing the pipeline of underrepresented candidates. Project Destined is probably one of the cooler initiatives I have read about. I believe they will especially make an impact on people from lower income backgrounds.