Private real estate – like many industries – is looking at issues of diversity, equity and inclusion in a different light these days. Once a niche subject left to human resources departments, passionate individuals and advocacy groups, DE&I has taken center stage for many managers, especially during the past two years.

The viral video of George Floyd, an unarmed Black man, being killed by Minneapolis police in May 2020 served as a wakeup call to many individuals, institutions and companies. It demonstrated that decades of incremental progress were not enough to erase the stigmas of racial prejudice or its consequences.

“George Floyd was a watershed moment for many of us, it brought about an understanding, nationwide, that we need to have tough conversations,” says Katherine Jollon Colsher, president and chief executive of the New York-based non-profit Girls Who Invest.

“Covid accelerated a lot of conversations about diversity, equity, inclusion and belonging, about policies to support women in the workplace. All of this has created a sense of urgency around diversity.”

Girls Who Invest educates young women and gender nonbinary individuals about asset management and places them into paid internships at top-level investment firms. It is one of the charitable organizations suddenly in hot demand in the world of private real estate. The non-profit has 125 partner firms and more that would like to work with it.

“Firms can’t just call us up and say, ‘We want to work with you’ – we have thresholds that they have to meet,” Colsher, a former Goldman Sachs managing director, says. “These are big changes that require our partner firms to have honest conversations about where they are now and where they need to improve.”

Working with groups like GWI is just one way managers have stepped up their DE&I efforts. Many have hired executives specifically to oversee DE&I programs and built teams to support them.

Many companies have formed employee resource groups to help women, racial and ethnic minorities and LGBTQ+ individuals advocate for themselves. Others have promised more inclusive recruiting practices and set targets for diverse hires and promotions – some in very public fashion.

More than 90 percent of commercial real estate firms have some kind of DE&I apparatus, according to a survey of 175 companies conducted by Ferguson Partners, a talent management advisory focused on real estate and asset management. More than half of those firms have formal programs for DE&I, while the rest have enacted specific policies or initiatives.

The foundation for change has been set, but managers are learning how much work lies ahead.

“While there is a well-intentioned path towards better DE&I in the commercial real estate industry, approximately two-thirds of survey respondents cited obstacles to developing and implementing their DE&I initiatives,” says Lindsay Wilhusen, survey director at Ferguson Partners.

Finding a target

Common hurdles facing the industry include a lack of prioritization by firm leadership, a skepticism about the business benefits of DE&I and budgetary constraints, Ferguson Partners’ Global Real Estate DEI Survey found. A more fundamental issue facing many professionals in and around private real estate is measuring progress both internally and against their peers.

Firms can count the number of diverse candidates they interview and ultimately hire, but that is merely one piece of the puzzle, notes Amy Price, president of BentallGreenOak, as it only speaks to the diversity component of DE&I.

“Diversity simply measures where you are today in certain dimensions. It doesn’t speak to the forward progress,” she says. “It doesn’t help you address challenges.”

The true challenge, Price says, is tracking progress – in real time – in the firm’s ability to make sure employees of all backgrounds feel supported, involved and optimistic about their ability to grow within the firm. To address this, BentallGreenOak has incorporated factors of race and gender in its engagement surveys to take discrepancies between different groups into account.

“Being able to put a layer of learning in an employee engagement survey that allows you to see how men versus women perceive their opportunity going forward, that is a far more powerful leading indicator and helps us quantify the sentiment where people are today to get ahead of it,” she says.

Still, firms are largely left to their own devices when it comes to generating this type of data and putting it to its best possible use. Jill Brosig, chief impact officer for the Chicago-based manager Harrison Street, says a lack of clearly defined DE&I goals for the industry could distort hiring practices in a way that is not beneficial to the firms or their employees.

“As an industry, we want to hire the right people because they are the right people for the job while ensuring we have a good cross section of all represented parties. You don’t want to be in a mode where you are hiring people to check a box,” Brosig says. “Metrics drive behavior, so we have to first start with the end in mind and determine what does success really mean. I don’t know if as an industry we know what that means.”

Setting the standard

A lack of industry standardization or independent certification means firms can only measure themselves against their own targets or those set by their investors.

Robert Wilson, founder of the non-profit rating system DEI Standard, says a purely self-reporting system creates an inherent conflict of interest for firms and often results in DE&I goals going unmet. In some cases, targets are hit but systemic issues remain unaddressed.

“One broad challenge with DEI is that it is likely to take a generation or more to come to fruition,” Wilson says. “Some companies have been focused on diversity for years, and have improved their numbers in that facet of their organization, but haven’t necessarily met the spirit of promoting and retaining women and/or people of color at the same pace as their white male colleagues.”

Wilson founded DEI Standard to create a certification similar to the US Green Building Council’s Leadership in Energy and Environmental Design (LEED) accreditation, which is considered the gold standard for environmentally-friendly building design.

His firm indexes pay disparities between male and female employees as well as between different racial and ethnic groups. By serving as a central depository for such information, Wilson says, his organization can hold firms accountable and track progress over time.

“The fact that there is not an independent standard with which to have an organization’s efforts at diversity, equity and inclusion evaluated is a challenge, and it is why we have launched Diversity Equity Inclusion Standard NFP, in an attempt to fill that gap,” he says.


Nearly a third of institutional investors consider DE&I a ‘highly important’ factor in considering allocations, according to an Escalent survey


Share of investors saying diversity and inclusion was a priority governance issue to be addressed for real assets stakeholders, according to a 2021 GRESB survey

Many other service providers are also looking to fill the standard-setting void in the DE&I space. Several consultancies have established practices focused on the topic and sought to generate data about best practices. Ferguson’s Wilhusen notes that firms identified as leaders in Ferguson Partners’ survey include Alliance Global Advisors, Bakau Consulting, Korn Ferry and McKinsey & Company, as well as her own group.

The Global Real Estate DEI survey is, itself, an attempt to address the need for data in the field. The study was once part of the compensation report compiled annually by Ferguson Partners and the industry group NAREIM since 2017. Last year was the first time the DE&I portion was broken out into its own, comprehensive review.

“Most firms are early in their journey in adopting sustainable policies that will make an impact and have a difficult time defining what a successful DEI outcome looks like,” Wilhusen says. “With this survey acting as a benchmarking tool, we aim to provide a valuable shared approach for the industry to keep itself accountable and measure progress on DEI year over year.”

The effort has seen broad support from institutional investors and managers alike, with sponsorship from the Asian investment manager group ANREV, its European counterpart INREV, the National Council for Real Estate Investment Fiduciaries, the Pension Real Estate Association, the Real Property Association of Canada and the Urban Land Institute, as well as NAREIM.

“The journey towards a more diverse, equal and inclusive industry will take time, but the appetite to participate in our survey demonstrates a willingness to share ideas, data and experiences,” Wilhusen says.

Another contender in the DE&I evaluation space is the Dutch firm GRESB, which bills itself as the global ESG benchmark. While the organization is best known for its environmental analysis, it has included questions about gender, race and ethnicity in some of its global surveys, senior director Dan Winters says.

While the subject of DE&I is still in its early days, Winters says it is clearly a priority for managers, and some interesting developments have emerged in different parts of the world.

“Fund managers are rapidly advancing formal DEI programs in an effort to retain and attract top talent,” he says. “Interestingly, Asia has the highest ratio of female senior executives at 32 percent followed by North America at 25 percent, with the EU lagging at 16 percent.”

Investor driven

As much as managers’ views on DE&I are changing of their own volition, investor demand is also a driving force behind the evolution. Nearly a third of institutional investors consider DE&I a “highly important” factor when considering allocations, according to a survey of more than 700 institutions with at least $100 million of assets commissioned by the advisory firm Escalent.

Similarly, in a 2021 GRESB survey, diversity and inclusion was identified as the most material governance issue to be addressed over the coming five years for all stakeholders in the real assets space. Among investors, 78 percent said it was a top focus.

Harrison Street’s Brosig says DE&I jumped into the top three ESG issues for the firm’s investors, according to its annual materiality survey, trailing only climate risk to assets and carbon emissions.

“We are also seeing increased level of due diligence questions from investors regarding our DEI strategy and initiatives,” she says. “So we are seeing that there is more emphasis on it.”

Harrison Street’s response to this heightened focus is to maintain its commitment to transparency. The firm releases a quarterly “impact dashboard” and reports DE&I progress on several fronts including hiring, senior management representation and gender pay parity, among others.

“We are transparent and classify what we mean when we reference terms like senior leadership, which for us is our managing directors and above,” Brosig says. “We are clear and transparent on how we define so investors can compare apples to apples, as best they can, with their other investment managers.” Investors are also frustrated by the lack of comparable data from third party sources. In GRESB’s survey of industry stakeholders, 44 percent of investors wanted a more fulsome assessment of the topic.

Absent industry standards, the onus is on managers to make the data they offer on DE&I as easily transferable as possible, because there is often a high degree of variability between investors as to what metrics are important to them.

“What we have found is that the definition of a diverse organization is unique to each [limited partner] and should be based on their individual goals,” Jasmine Richards, head of diverse manager research at the consultancy Cambridge Associates, says. “When considering an investment, we are ultimately looking for authenticity.”

Cambridge Associates has surveyed managers on the diversity of their ownership, management, investment decision makers and teams since 2019. Richards says providing this level of transparency is “table stakes” for many investors.

“When making investment decisions, we are using that data as a jumping off point for a deeper discussion,” she says. “We are investing in real estate managers who not only consider the diversity of their investment teams but also the diversity among their operating partners, developers, banking partners and the impact to the communities in their portfolios. All of that matters.”

Talking it out

With so much still to accomplish for all parties on the DE&I front, the most important thing groups can do is to discuss where they are and where they want to be, believes Colsher.

“The more firm leadership talks about their goals externally, the better,” she says. “The reality is, people know when a firm is not diverse, but they want to know what steps are being taken to make improvements.”

BentallGreenOak has been one of the more vocal firms on this front. In August 2020, the firm pledged that two-thirds of its new hires would be women and/or identified minorities. If it fell short of this mark, the $80 billion manager would face self-imposed financial penalties.

Price acknowledges that questions were raised – both internally and within the industry more broadly – as to whether a public announcement was the best way to achieve this goal, but time has proven the tactic to be effective.

“Although there were mixed feelings about it, it served a purpose of sending a message to the talent out there, diverse talent, that this would be a place where they would be welcomed, and hopefully have career and opportunity,” says Price. “And consistently we have been above that target.”

Since the commitment, more than 70 percent of BentallGreenOak’s hires have been women and/or minorities, according to the firm’s internal data. Price says the commitment helped the firm hold itself accountable and it will continue to do the same for its equity and inclusivity targets, too, as it aims to reach gender parity throughout its corporate leadership by 2030.

“We set goals for nearly everything in this business,” Price says. “Why not this?”

DE&I initiatives did not originate in 2020, but they were given a renewed vigor and have since proliferated in the world of real estate investment. Two years later, the industry’s resolve to improve remains strong, but the realities of the task at hand have fully set in. Progress has been made, but there is a long way yet to go.

Richards points out that fund managers owned by women and people of color account for just 2 percent of assets globally. And these groups make up just 10 percent of the investable universe.

“So not only are diverse fund managers underrepresented, they are also under-invested in,” she says. “While there certainly has been an increased intentionality on equity within the industry, I am sure we all can agree that there is significantly more progress we all can make.”