America’s changing demographics call for solutions that increase the number of women and minorities in the land use and development professions, as well as a focus on real estate deal making that is rooted in principles of equity, diversity, and inclusion.

hartdiverse_2_300At present, several major U.S. cities have “majority-minority” populations—that is, more than half the residents are members of a minority—including Los Angeles, Atlanta, Chicago, and Washington, D.C. Demographers project that the United States will be a majority-minority nation in 2042, with the U.S. Census Bureau predicting that 46 percent of the population will be non-Hispanic whites while 54 percent will be Hispanics, African Americans, or Asian Americans. The bureau also predicts that the nation’s population in 2050 will be 439 million, a 46 percent increase from 2007. As the country becomes more racially diverse, there will be a need for renewal and change in various industry sectors, including land use and development, to reflect the new demographic reality.

This renewal and change process suggests a search for solutions that can effectively mainstream outsiders into the land use and development industries. In March 2007, the quarterly UCLA Anderson Forecast published a monograph titled “Solutions for Our City,” which includes an article that addresses ways to increase diversity in the urban planning and development industry in Los Angeles. A number of initiatives around the country have as their objective increasing the number of women and racial and ethnic minorities in the land use and development industries, and provide examples of real estate development projects where equity, diversity, and inclusion are guiding principles in deal making.

The mission of the Urban Land Institute is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. In ULI’s Statement of Principles is its resolve to continue its commitment to and emphasis on being inclusive and diverse. In addition to the concern about responsible use of land, there is a need to focus attention on the people using the land. The United States is becoming a more diverse nation, a mosaic of races, ethnicities, cultures, religions, and backgrounds.

Those individuals dominating the land use and development industries in the United States have historically been nonminorities. Given the changing demographics in the nation as a whole, it is imperative to seek solutions to this situation through strategies to mainstream women and minorities more broadly into the land use and development professions. Perhaps an appropriate time to begin laying the groundwork in the search for mainstreaming solutions is when the economy is in recovery.

On the supply side of this search for solutions are such programs as the Real Estate Associate Program (REAP), the newly initiated Real Estate Diversity Initiative (REDI), and the University of Southern California (USC) Ross Minority Program in Real Estate, as well as diversity programs at firms such as Cushman Wakefield and CB Richard Ellis. REAP is an industry-backed, market-driven program that finds and trains career-changing minority professionals for positions in commercial real estate.

REAP has operated in Atlanta, Chicago, New York City, and Washington, D.C., to date and is slated to launch in Los Angeles in fall 2011. ULI has been a supporter of REAP over the years.

REDI was launched with the support of a ULI Foundation Community Action Grant in 2009 by ULI Colorado and the city and county of Denver. The REDI program goals are to increase the number of minorities and women in the real estate industry, particularly in real estate development, and to increase ULI’s membership among women and minorities.

The USC Ross Minority Program was organized soon after the 1992 urban riots in Los Angeles, and its mission is to increase development capacity among minority communities and people interested in working in these communities.

Cushman Wakefield has articulated an inclusionary process that includes diversity as a core value. In 2003, Cushman Wakefield entered into a partnership with Concordis Real Estate, which is wholly owned by independent minority-owned real estate firms across the country—a first for a real estate services firm.

hartdiverse_1_351On the demand side of this search for solutions is the question related to how these changing demographics frame new markets or customers and the resulting impact on the demand for real estate products in the years to come. The United States has an urbanized population, with 81 percent residing in cities and suburbs as of mid-2005. As a generalization, members of this new minority-majority in 2050 will have had more experience residing in high-density urban communities and have higher rates of public transit use than their white counterparts. Thus, it can be anticipated that they will be more in tune with high-density development, transit-oriented development (TOD), and the smart growth principles now taking hold in metropolitan areas nationwide.

In addition to the supply- and demand-side challenges, there is a need to search for solutions that can provide for equity, diversity, and inclusion in real estate deal making. For the most part, minority land use and development professionals have been confined to deal making in urban, inner-city locations. These deals are usually smaller in scope and value than those entered into by nonminority land use and development professionals. One example of inclusion in real estate deal making is described in a July 2005 Urban Land article titled, “Boston’s Parcel-to-Parcel Linkage Plan.” In this instance, women and minorities were at the center of a major real estate deal based on a parcel of land in Boston’s Financial District that was economically connected to a parcel in the Roxbury neighborhood that is a key TOD site on the Massachusetts Bay Transportation Authority’s Orange Line. The development strategy was predicated upon the goals of equity, diversity, and inclusion. The 1 million-square-foot (93,000-sq-m) Financial District office tower built under this development strategy was sold in 2004 for what at the time was the highest per-square-foot price in Boston commercial real estate history. The community benefits package tied to this deal based on diversity and inclusionary principles yielded funds for affordable housing, produced wealth in the minority community, and created jobs in these same communities.

A second example is in Los Angeles. When the 5,000-seat West Angeles Cathedral was being developed in South Los Angeles starting in the mid-1990s, every major general contractor in the city wanted to bid on building this high-profile edifice (see “Faith-Based Development,” June 2005). The West Angeles Church Building Committee instructed the general contractors that in order to bid on the project, they had to partner with a minority general contractor. The building committee also instructed the general contractors that their subcontractors had to be fully responsive in terms of trades drawn from minority- and women-owned firms. It was also mandated that the labor force participation had to exceed the city of Los Angeles’s construction hiring goals.

With these mandates, each major general contractor that submitted a bid found a minority partner. The building committee selected Turner Construction (and its Los Angeles office) and the Bedford Group, a Los Angeles–based African American–owned firm, to build the $65 million edifice, which was dedicated in April 2001. The building committee had also instructed Turner to open its cathedral construction bank account at a local African American–owned bank, thus funneling nearly $30 million through this bank during construction.

Nearly ten years later, people periodically come by West Angeles Cathedral and say they are still working because of their experience with the cathedral project. One of the Turner Construction/Bedford Group electrical subcontractors gained so much experience on the cathedral project that he is now a primary electrical subcontractor on the $862 million Los Angeles County Metropolitan Transportation Authority Exposition Construction Authority Light Rail Line Phase I to be completed by mid-2011, which will have a station across the street from the West Angeles Cathedral.

Even with these best-practices examples of supply-side programs and inclusionary real estate deal making, much more needs to be done. Despite these successes, minority land use and development professionals nationwide are still largely confined to urban, inner-city areas. Harvard Business School professor Michael Porter has developed an influential model of inner-city revitalization predicated on the notion of the competitive advantage of the inner city. His message is that a strategy for gaining a competitive advantage is crucial in the effort to form strong and vital clusters of both social and economic activity, a message that has resonance with nations, states, counties, cities, and inner cities.

With the ongoing economic downturn, more nonminority professionals are looking to become engaged in inner-city projects. The changing demographics of U.S. cities and the nation call for solutions that increase the number of women and minorities in the land use and development professions, as well as focus on real estate deal making that is rooted in principles of equity, diversity, and inclusion. The United States will become a stronger nation if it achieves success in mainstreaming outsiders, thus taking full advantage of its considerable human resources in a true partnership across race and gender lines.