Commercial real estate is one of the oldest and largest industries in the world, with a seismic impact on the global economy, which is why it’s so unfortunate that it’s not known for being a very diverse sector. It’s easy to understand why: CRE is filled with firms that have been built around male-dominated family dynasties. Commercial real estate is also not seen as an option as a vocation by women and minorities.
The good news is that an increasing number of companies in commercial real estate have taken steps to change that in recent years. But the rate of progress for an industry that has a major impact on the world has been sluggish at best. While there are several reasons for this, one that stands out is a lack of a clear strategy for diversity, equity, and inclusion (DEI) that commercial firms can adhere to. But recently, the International WELL Building Institute (IWBI) launched a rating system to make that path towards diversity more straightforward.
DEI might be a new business buzzword, but it is a very simple idea dating back to the 1960s. It refers to the practice of hiring and promoting people of all gender, race, age, and ability in organizations, institutions, and communities. After George Floyd’s murder sent shockwaves throughout the U.S. and cast a harsh spotlight on systemic inequities, a medley of real estate firms, investors, and developers leapt on making verbal commitments to enhance their diversity efforts. Cushman & Wakefield led the charge in 2020 by being the first major commercial real estate firm to hire a diversity executive. More targeted DEI initiatives from institutional juggernauts began to appear soon after, like JLL’s inclusive hiring program and Tishman Speyer’s mentorship program for students in underserved communities.
Naturally, these announcements were met with accolades, as you’d be hard-pressed to find anyone who disagrees with cultivating inclusivity, but the rollout of these diversity initiatives from such big-name players has yet to budge the numbers all that much. The Urban Land Institute’s most recent Global Real Estate DEI Survey has only shown muted improvements in diverse hires within CRE. Between 2021 and 2022, commercial firms in North America hired 0.2 percent more Latino men and 0.4 percent more Latino women. The presence of Asian men and women had both increased by 0.9 percent. However, commercial firms had only hired 0.1 percent more Black men, and the presence of Black women had actually decreased by 0.3 percent.
Now it’s not as if commercial real estate companies aren’t vying to create tangible industry change in some way. A majority of CRE companies are placing an emphasis on diversity training. Almost forty percent of commercial firms have already implemented anti-bias training programs, and 33.7 percent plan to introduce anti-bias training programs in 2023. But study after study has shown that anti-bias training programs only bear a fleeting psychological impact that seldom causes any profound behavioral change.
Even with the best of intentions, implementing anti-bias training has the potential to fall short if it’s not paired with other active DEI measures. Unfortunately, this is where a lot of real estate organizations struggle. Many firms deploy their own DEI framework where managers can change metrics to suit their performance ratings with little oversight. The real estate industry has been known to suffer from a lack of a cohesive DEI standard, which is a huge problem as effective and industry-wide DEI initiatives can stand to really affect positive change.
In addition to comprehensive DEI activities that provide a consistent work experience for everyone, organizations need well-being strategies that are equitable and inclusive of different employees. Leaders must simultaneously acknowledge that varied employees’ experiences and needs in terms of wellness might vary greatly. Nobody can perform at their best at work if they are dealing with their health and well-being, and each person has different demands. And the link between employee well-being and DEI has long been established.
Diversity initiatives that are executed with intention can benefit employee health in several ways. First, a diverse and inclusive workplace can foster a sense of belonging and community among employees, which can improve mental health and well-being. When people feel like they are valued and accepted for who they are, they are more likely to be engaged and motivated at work. Second, DEI initiatives can help create a safer, healthier, and more supportive work environment for all employees. This can lead to better physical and mental health outcomes, as employees are less likely to experience harassment, discrimination, or other forms of mistreatment. Finally, DEI initiatives can help to reduce stress and improve work-life balance for employees. For example, initiatives like flexible work arrangements and paid time off can help employees manage their work and personal commitments more effectively, leading to better overall health and well-being.
“Equity is the very foundation to healthier, stronger, and thriving organizations,” said Kimberly Lewis, Executive Vice President of Equity, Engagement, and Events at IWBI. “Equity and health go hand-in-hand.” Lewis was speaking on behalf of IWBI’s launch of the WELL Equity Rating, a new rating system that is intended to equip companies better to address the needs of underrepresented and underserved communities and take an action-oriented approach to develop equitable, people-first places by offering an evidence-based roadmap.
The rating, which was under development for two years (with input from over 200 outside advisers and organizations representing racial and ethnic minorities as well as organizations representing groups that are frequently underrepresented in the workplace), is inherently designed to be a starting point instead of a stopping point. The Equity Rating is not a sticker, it’s an evidence-based strategy broken down into 43 components. These components cover six different action areas, including user experience and feedback, responsible hiring and labor practices, inclusive design, health benefits and services, encouraging initiatives and environments, and community involvement.
The WELL Equity Rating helps organizations ensure everyone in their workplace is treated fairly and given the same opportunities, helping them create a safe and healthy environment for their employees. It also rates a company’s efforts to improve health and well-being, celebrate DEI and accessibility, and foster sensitivity while addressing disparities among groups that have historically been disadvantaged or underserved. For the real estate industry’s ongoing diversity problem, the rating may be a game changer in 2023.
“As real estate leaders continue to commit to diversity, equity, and inclusion (DEI), they need a road map for activation and accountability,” said Dr. Angelita Scott, Director and Community Concept Lead at IWBI, who served as the principal architect of the rating. Scott stressed that a third-party verified solution can offer evidence-based strategies and actions that “can empower these organizations to uplift historically excluded voices, strengthen company culture, improve organizational outcomes and enhance environmental, social, and governance performance.”
Again, real estate has suffered from a lack of cohesive guidance on DEI, so Dr. Scott is confident that the WELL Equity Rating can bridge that gap, especially because the rating is expected to evolve and improve over time with annual re-verifications. The rating also stands out because it’s based on the location of organizations, so it’s not meant to serve as a blanket inclusivity quota but a benchmark to reflect the local community. The WELL Rating’s participants sign up their company based on where their personnel is located, which may be spread throughout several global offices or a single autonomous location. At the time of the WELL Equity Rating’s launch at the end of last November, over 30 companies had signed on to be early adopters, and big-name real estate players like JLL and Empire State Realty Trust are on the list.
Truly valuing and integrating diversity into real estate operations benefits everyone’s business and has a long-lasting effect on the community. It’s crucial for the industry to work towards increasing diversity in order to create more inclusive and equitable workplaces and to better serve the needs of a diverse society, but it’s regrettably been doing so at a glacial pace. The checks and balances interwoven in IWBI’s new rating system show promise to spur the movement toward actionable diversification, but it’s ultimately up to the companies who use it to really push for progress rather than just tout their new trophy.